   
hsconline
Posts: 15
Joined: 11/6/2007
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 Is stamp duty payable on a shared o...
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Q I am buying a flat with my partner. I am a keyworker and we are purchasing under the new-build Homebuy scheme and are buying a 60% share at a cost of £169,000. We were hoping to complete around April. In the budget we heard it was no longer necessary to pay stamp duty until you staircase your share of a property up to 80%. I asked our solicitor to look into it and he has come back saying he spoke to HMRC and we do still have to pay it – apparently it is only exempt if the value of the share of the property is less than £125,000. As far as I know that has been the rule for sometime, but the new rule applies only to shared ownership and did not depend on the value being purchased. Is this correct?
HR
A This is what the budget press notice, issued by HM Revenue & Customs, said: "From today, changes to stamp duty land tax (SDLT) rules will ensure that in the vast majority of cases, buyers of shared ownership products will only pay SDLT on acquiring the final 20% of the property unless they elect to pay SDLT up front."
And you are not alone in interpreting this to mean that if you buy a share of a property through an approved shared ownership scheme that the transaction would be exempt from SDLT. Sadly, according to the person I spoke to at HMRC, that's not what the chancellor meant at all.
There is no new rule making shared ownership purchases exempt from SDLT and the tax you have to pay will still depend on the value of the share purchased. So as the value of your share exceeds the £125,000 limit, you will have to pay SDLT on the full purchase price of £169,000.
What the chancellor was referring to was the abolition, from budget day onwards, of a technicality called the "£600 rule". This meant that SDLT had to be paid on the purchase price if the annual rent on the part of the shared ownership property not owned by the buyer was more than £600, even if the purchase price was below the SDLT limit.
Because the rent paid by a lot of shared ownership buyers was often more than £600, they were often hit with an SDLT bill. So it's the abolition of the £600 rule which means that "in the vast majority of cases" shared ownership buyers will escape having to pay SDLT.new build Flats
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