Mortgages and first time buyer advice and stamp duty

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  • Mortgages and first time buyer advice and stamp duty
  • https://www.moneyadviceservice.org.uk/en/articles/everything-you-need-to-know-about-stamp-duty

    So I own property (with a mortgage on it) and my long term girlfriend (but soon to be wife) doesn’t. My question is to get around stamp duty as she would qualify but I wouldn’t, is there anything that we could do when buying our next home? Reading through the above she could buy upto 300k on her own and not pay stamp duty but our next home would be around 450k and need both of us on the mortgage (at least in principle). Other thing is I was hoping to try and keep my property and rent it out.

    P-Jay
    Member

    I wouldn’t imagine you will do, well unless your Intended can buy it in her own name alone.

    I’m also a bit bitter, we’re buying our first place at the moment. It’s £250k, but because we live in Wales we don’t qualify for any FTB allowance.

    Premier Icon MarkyG82
    Subscriber

    Short answer is no. I’m sure there wold be a way of you gifting her the proceeds of selling your house and then she buys with you contributing. Very risky IMO. And getting the timing right would be tricky.
    If you can afford to keep the old house while buying another, that may be the best long term solution. We are considering the same but there are new rules on income tax meaning renting out a second home is quite expensive to the owner to the point where our current, relatively affordable, mortgage payments would end up being more than we would gain back in rent. then you have fees and maintenance to get round.

    5lab
    Member

    no, so you’ll be paying around £26k in stamp duty. ouch!

    Premier Icon Dickyboy
    Subscriber

    I doubt it, remember that as a married couple you can’t legally have two separate homes so you may well be clobbered for second property stamp duty uplift as well.

    250k won’t get a lot in the area I live, in Wales surly you could buy the whole road for that?
    That is shame p-jay that ftb isn’t the full of the UK

    Dickboy – we have only just got engaged so there isn’t any time restrictions for when you buy, just trying to see is it worth putting her on my mortgage at the mortgage to give her protection if something should happen to me. Death and taxes

    I have been looking into second property renting out and it doesn’t seam as rewarding as previous years. To be fair I do also think out moving away to Wales to get a lot more for my money in the first pace (and the riding isn’t bad either)

    poolman
    Member

    Stamp duty is painful now, I have only ever paid sub 5k on my house, now a 1 bed flat brings a sdlt of 15k. Good news is the market is falling away so the actual purchase price has fallen too.

    There is no way round it, just pay up. Also, rental economics are poor now as you will be taxed as marginal income with fewer allowances so for all the stress you get little reward.

    5lab
    Member

    There is no way round it, just pay up

    well you can avoid the extra 3% surchage on the whole property (~£14k here) by not keeping the old place and renting it out. Which is exactly the behaviour the government would like.

    Premier Icon oldtennisshoes
    Subscriber

    In Scotland there’s an 18 month changeover period I think, which means that you can stump up the extra when you buy the second place, but get it back within 18 months if renting it out doesn’t work out.
    The BTL allowances are not what they once were – how about holiday letting your existing gaff? You’ll still pay the stamp duty, but the allowances are more generous.

    Obvs this puts you in evil bastard worse than BTL landlord category…

    Premier Icon tonyg2003
    Subscriber

    When you buy you pay the stamp duty then you can either sell the old place and have 3 years to claim back the 2nd house surplus or put the whole house in your wife’s name and take a chance that it won’t be found out. Although if you use a solicitor they will probably not be up for the second option since they will be complicit.

    Obvs this puts you in evil bastard worse than BTL landlord category…

    I’m not the sort of person to invade Poland but might kick a small kitten…

    It’s just very frustrating that she is still a first time buyer but won’t get any stamp duty exemption if she buys with me. I have read else where that she could put me down as a tenant rather than on the mortgage (for the first mortgage at least) to get around stamp duty. Obviously a lot of trust is needed with what ever we decide or can legally able to do (tax avoidance rather than evasion).

    Nothing to add to this other than HOLY ****!!! When did stamp duty become so eye watering? We bought a decent sized property in the South East and didn’t have to pay a penny. Now you pay it all the way down to 125k!!!!

    It’s slightly too small for us and I assumed we’d get somewhere bigger one of these days. Turns out I literally can’t afford to move, it would cost me over a year’s net salary in tax alone…

    (I’m not saying any of this is wrong they’ve got to tax something and houses are a good target. I’m still shocked.)

    I hope your missus is earning 100K a year, as thats what the mortgage provider is going to ask her to prove for sole mortgage payment.

    She can’t really say, “Oh, but by the way my husband/boyfriend is going to pay half the mortgage” because then really you should be joint owners, or they may view your ‘contribution’ as a risk.

    Sadly, it’s time to stump up the tax.

    finbar
    Member

    I’m – touch wood – buying a house later this month. £200k. Stamp duty land tax will be £1500. Seems perfectly reasonable to me…

    You won’t get around it. We had the exact same thing – I was a FTBer, other half had owned a flat in Scotland that she sold over a decade ago, but because of that she wasn’t a FTBer so we had to pay up. £4.5k on a £285k house.

    If you’re a couple and you’re living in the house, even if it’s just her name on the mortgage then you would have what HMRC terms a “beneficial interest” in the property; as they define it – “any future entitlement to capital proceeds from the sale of the property, to income or to occupy the property”.

    Sorry, you’re going to have to stump up.

    Joint borrowers Sole proprietor- MIGHT be an option. Find a good mortgage broker.

    TheBrick
    Member

    Which is exactly the behaviour the government would like.

    Unless you are eeathy enough to own several buy to lets then the ecomics become different as you regain the tax off set of interest and other benifits. So ok for the wealthy but not ok if like as above you are a couple buying together.

    I hope your missus is earning 100K a year, as thats what the mortgage provider is going to ask her to prove for sole mortgage payment.

    How do you figure this number out. She could easily have saved big deposit. I saved a big diposit for my first house on wage technicalally “above average” but by no means exceptional. (Actually for most of my saving time it was at or below average).

    Premier Icon Rich_s
    Subscriber

    You won’t get around it. We had the exact same thing – I was a FTBer, other half had owned a flat in Scotland that she sold over a decade ago, but because of that she wasn’t a FTBer so we had to pay up.

    I wonder how they’d find out about it though? Is there some kind of big unifying IT system linking mortgage companies – HMRC – Local Authorities? I doubt it given how shite government and bank IT systems are.

    Premier Icon MarkyG82
    Subscriber

    I wonder how they’d find out about it though? Is there some kind of big unifying IT system linking mortgage companies – HMRC – Local Authorities? I doubt it given how shite government and bank IT systems are.

    You are right. However, they may feel differently if they find out. For some it may be worth the risk but it’s a loophole that is a legal grey area. If a mortgage advisor, IFA or solicitor said go ahead/these are the risks then maybe I would try it, but…….

    Solicitor’s have to declare it

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