Strange Situation for Higher Rate SDLT

[Sashxxx]

I wonder if anyone can advise on my situation please as there appears to be no guidance or similar case studies anywhere that I can find.

I purhcased a house in 2002, which I lived in for 6 years, and have rented out ever since.

I then bought a house with my Husband and sold that main residence in September 2014, when we separated. I went on to rent a house for 3 years before moving into my new partner's house in August 2017. We took out a joint mortgage on his house in April 2018 and received a bill from the Solicitor for 3% SDLT on my share of the joint mortgage. This was later retracted when I explained to the Solicitor that the transitional period to buy another main residence was in place until November 2018.

I then separated from my partner and I was removed from his mortage in August 2019; he paid me an amount of money for what I'd put into the house. We were not married.

I have rented an apartment on my own since then and am in a position to buy a new house on my own later this year.

So my question is this... whilst I still own the other Buy-to-let property, I have in effect partially owned a main residence within three years of buying a new main residence. I wasn't sure if I fall within the rules of replacement excemptions and am therefor not liable to pay the additional SDLT for a second property.

Thanks in advance for any advice

[bd6759]

You disposed of an interest in a dwelling in August 2019, and have three years from that date to purchase a new dwelling and avoid the HRAD.

[Sashxxx]

Thank you bd6759... this is what I thought, but I just can't find anything that seems to categorically confirm it on the HMRC website.

My concern was that I was only on the mortgage for 16 months and there may be some rule that meant I still had to pay the higher rate. I also wondered if it mattered that it was his house originally, and still is, so no actual sale took place. I was put on the legal paperwork as owning a 33% share in the property.

Thanks very much

[maths]

Prior to sash's last post it was not clear from the earlier post that any beneficial interest in the property had been acquired in exchange for consideration in August 2017. All that prima facie happened was that sash she was added to the legal title and became a joint mortgagee.

Being released from the mortgage was not consideration for the disposal of a beneficial interest. Thus no SDLT payable.

If however re the latest post she in fact acquired a 33.3% interest plus becoming a joint mortgagee consideration was given and possible SDLT liability arose.

It then appears sash sold the 33.3% interest in August 2019.

[maths]

Please ignore my earlier post; will repost.

[Sashxxx]

Thanks for the reply maths...

I have no clue about the legal aspects of this really but I had to complete Land Registry documents when we took out the joint mortgage on the remaining balance of debt owed on the house i.e. he retained his equity already gained in the property by adding me as a 33% owner of the house once the mortgage was paid off. This was stated on a form we signed in person at the Solicitors. As I stated I did get a bill for the 3% SDLT from the Solicitor at the time, but as I had sold my main residence in 2017 I fell within the 3 year transitional period of not having to pay the new higher rate. The Solicitor didn't actually know this and then wrote back to retract the bill and sent the HMRC guidance note on it saying that she agreed with me and no SDLT was payable.

Then when we ended the joint mortgage I had to complete an LR1 form to, I think "dispose" of my interest in the house with Land Registry and be taken back off the deeds to the property. My ex-partner paid me a mutually agreed sum of money for what I had put into the house - this was not organised through a Solicitor, just an arrangement between ourselves.

I have contacted a Solicitor today who is a SDLT expert, especially around the higher rate rules, and he agreed to take me on as a client for an initial fee of £840 to tell me which points in the guidance note to refer to when making a case for not paying it; he then wanted £275 an hour to compile a written report to give to the conveyancing Solicitor who would complete the SDLT1 form on a new purchase.

I do not really want to pay such fees as I think the information is available within the guidance note for me to compile my own case. I am a qualified chartered accountant, but obviously this is not something I am familiar with. My friend who advises people on tax efficiency on pensions and investments etc. says he can charge £6k+ to someone who could actually find the information themselves on the internet if they had the confidence to do it - which many don't apparently.

I just wanted to get some other opinions before I start to invest lots of time into researching the very specific rules surrounding this

[Sashxxx]

Correction, I'd sold my previous main residence in August 2014 and then had the transitional period until Nov 2018 in which to buy another property without paying the higher rate SDLT. So the Solicitor was treating me as buying into another property by sending me a bill for the 3% SDLT? I think

[maths]

You appear to have acquired a 33% beneficial interest in a property in August 2018 at the same time being added to the legal title and taking on a joint mortgage.

SDLT would have in principle been payable at the higher rate of SDLT but as you replaced one main residence with another within the requisite time period the higher rate would not have applied.

You then sold this interest in August 2019. No SDLT as you were the vendor not purchaser.

If you therefore purchase a main residence as replacement for the property sold in August 2018 (which I assume was you main residence) within 3 years of this date then the higher rate would not be in point.

Whilst I am by no means an expert on SDLT, my experience of posts on this website is that many if not most solicitors do not understand the rules around the 3% surcharge (although AGoodman, Lee Young and SDLT Geek who each are solicitors and post on this site are extremely knowledgeable re SDLT; may be they will confirm or more likely correct my post).

[Sashxxx]

Thanks maths... this is what I think, too! I really hope so anyway! Means I can buy a house now instead of in 6 months' time once I've saved the extra Stamp Duty Maybe it's worth the £840 Solicitor fee but not have the report written as it would in effect save me £6500 in SDLT.

Praying one of those you've listed reads my post and replies... thanks so much for your advice

[maths]

You don't need a report to be prepared for conveyancing solicitor.