Q&As

A and B are an unmarried couple and own a property, in which the legal and beneficial interests are vested equally in both. A and B have now separated, and A wishes to purchase 49% of B’s beneficial interest and enter a declaration of trust to reflect that A would now be entitled to 99% of potential net sale proceeds. The property is not A’s main residence. The property is worth £450,000 with a £60,000 mortgage. Will the purchase of 49% attract stamp duty land tax (SDLT) and will an SDLT return need to be filed?

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Produced in partnership with Michael Fluss of Keystone Law
Published on LexisPSL on 10/08/2020

The following Tax Q&A Produced in partnership with Michael Fluss of Keystone Law provides comprehensive and up to date legal information covering:

  • A and B are an unmarried couple and own a property, in which the legal and beneficial interests are vested equally in both. A and B have now separated, and A wishes to purchase 49% of B’s beneficial interest and enter a declaration of trust to reflect that A would now be entitled to 99% of potential net sale proceeds. The property is not A’s main residence. The property is worth £450,000 with a £60,000 mortgage. Will the purchase of 49% attract stamp duty land tax (SDLT) and will an SDLT return need to be filed?

For the purpose of this Q&A, we have assumed that:

  1. the property is a dwelling

  2. the interest held by A and B is a freehold interest or a leasehold interest granted for a term of more than seven years

  3. A occupies another dwelling as A’s only or main residence in which A has a freehold or leasehold interest

  4. A and B are not civil partners of each other and/or are separated in circumstances in which the separation is likely to be permanent

  5. A will not acquire B’s interest as part of any business of buying and selling dwellings undertaken by A

  6. the trust to be declared by B in favour of A will be a bare trust

  7. the acquisition by A will complete on or before 31 March 2021

As A’s current share of the dwelling in monetary terms is £225,000, A will need to give consideration of £220,500 to B in order to acquire a 99% beneficial interest in the dwelling. A’s purchase of a further 49% interest in the dwelling will, therefore, entail A purchasing 98% of B’s interest in the dwelling.

Following the relaxation of the Stamp Duty Land Tax (SDLT) thresholds announced by the Chancellor on 8 July 2020, the transfer or grant of a freehold or leasehold interest in a dwelling for chargeable consideration not exceeding £500,000 is not chargeable to

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