What do the changes to SDLT mean for married couples/couples in a civil partnership?
If you currently own a property with your spouse or partner and are looking to purchase an additional property either individually or jointly, you are likely to be affected by the new changes to Stamp Duty Land Tax.
The new changes introduce a 3% increase above the current Stamp Duty rates making Stamp Duty payments increasingly costly in the below scenarios.
Couples Buying Individually
If, as an individual, you are looking to purchase a property, are married or in a civil partnership, and your spouse or partner already owns a property, you will be liable to pay the new higher rates provided the new Stamp Duty conditions are met. In addition your spouse will be treated as a joint purchaser.
HMRC have provided the following example to clarify this point:
Q – I own a house with my husband and live there as my main residence. My husband is planning to buy a flat to rent out – this will be in his name only. As we will then only own one property each I assume the higher rates will not apply to the purchase of the flat?
A – The higher rates will apply to the purchase of the flat. As a married couple all property owned by either of you is treated as jointly owned. The purchase of the flat will therefore be classed as an additional residential property for both of you.
Couples Purchasing Jointly
If you and your spouse currently own a property and are looking to purchase an additional property jointly, then you will be liable to pay the higher rates.
This rule applies if you are purchasing as joint tenants or tenants in common, and it does not matter how small the interest in the property is for either of you.
A further example from HMRC:
Q – My partner and I jointly own our home. We are purchasing another residential property which we intend to rent out/use as a holiday home. Will we have to pay the higher rates of SDLT?
A – Yes, you will be liable to the higher rates if purchasing an additional residential property (and not disposing of the previous main residence).
An exception to the new rules applies to couples who are legally separated or there are circumstances which suggest separation is permanent. You will not be liable to higher rate Stamp Duty in these circumstances.
HMRC provide the following example:
Q – I have recently separated from my spouse and am about to purchase a new property that will become my main residence. I still own a share in the former marital home. Will I be liable for the higher rates of SDLT?
A – If you purchase a new main residence while still owning a share in your former home the higher rates will apply. However, if you are separated and this is likely to be permanent, and your previous main residence is sold within 3 years of purchasing your new one, a refund on the higher rates can be claimed. Wendi Coupland in our Residential Property team outlines this in more detail, click here.
For further useful information please see HMRC’s official guidance here. The guide is a brief guide to the changes for married couples and those in civil partnership and we would be happy to advise you further.
Please contact Genni Tipping in our Residential Property team for more information.