Avoiding the additional stamp duty by transfer of deeds?

Avoiding the additional stamp duty by transfer of deeds?

10:01 AM, 6th January 2022, About A year ago 15

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I bought a 2-bed flat in 2016 in Scotland as my main residence for £167k and have £77k left on the mortgage, the flat I believe now to be worth only ~£90k.

I moved back to England and bought a second home in 2019 (main residence) for £267k with £200k left on the mortgage, the house I believe now to be worth ~£300k.

I didn’t want to sell my flat because of the huge loss I would make, so I rent it out to a friend (albeit still on a residential mortgage) including bills but for less than the monthly mortgage payments + bills etc.

I paid additional surplus stamp duty on my second home in England (~£12,000) but understand if I sell my flat within 3 years I can get the additional part (~£8k) back but when my flat is worth so much less now than in 2016, I don’t want to sell it and accept the loss especially when it is being rented out.

I am a higher taxpayer (40%) and my girlfriend is a lower taxpayer (she doesn’t own any property) and my mother is a lower taxpayer (shared 50% ownership with my dad and mortgage free). My mother inherited a house off her mother in 2020 mortgage free and rents it out as an HMO. I have a sister who is also a lower taxpayer and homeowner. I don’t have any children.

I am the only one down on both mortgages but interested in purchasing a new property with my girlfriend (£400k-ish in England) but don’t want to pay the £22k stamp duty bill and don’t really want to sell my first flat at a significant loss. My second main home in England I am happy to sell as it’s increased in value but don’t really need to, to afford the third shared place with my girlfriend, so I am open to keeping and rent it out or selling.

My girlfriend doesn’t have as much savings or a high paid job so wouldn’t be able to afford £400k new home and soon as my name is involved we would be stung with a £22k stamp duty bill as it stands. I don’t particularly want to give my girlfriend £50kish, and it all be under her name as owner as it would leave me vulnerable and friends of friends have found themselves in a position which they significantly regretted doing similar.

I appreciate it may sound like I am trying to have my cake and eat it, while also insuring myself against risk, but we have to start somewhere –

Is there any options I can take such as transfer deed of flat to Mum as beneficiary and her pay the £1,500 (3% of the £50k which is above the threshold of £40k if valued at £90k) but I still pay the mortgage and sell my second home the usual way to avoid the additional stamp on my third shared place with girlfriend and I get the £8k additional stamp back (minus £1,500 I would give back to Mum)?

Or move both current properties over to a LTD/LLP?

Many thanks


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Katy Ann

9:09 AM, 8th January 2022, About A year ago

Reply to the comment left by michael O'Connor at 07/01/2022 - 14:56
It doesn't say “major stake”; it says “major interest”, which is a different thing. “Major interest” means either a freehold or leasehold interest, as distinct from (say) a lesser kind of right over the property such as a licence to use the property short term.


11:49 AM, 8th January 2022, About A year ago

Which property is nominated as your PPR main residence? You can only have one. Ignoring the issues about letting on a residential mortgage, if you are within the 2-year period when you can elect, choose the English property (sounds like you already have). Then when you sell the Scottish property you can declare a loss for CGT which can be carried forward and set off against future CGT gain. Your rent on the Scottish property is taxable and mortgage interest is not deductible.


11:55 AM, 8th January 2022, About A year ago

Correction: mortgage interest is relieved at the basic rate

michael O'Connor

12:11 PM, 8th January 2022, About A year ago

Reply to the comment left by Crossed_Swords at 08/01/2022 - 11:49
I am English and larger house is my
That sounds like a plan. Not sure when I sell my Scottish flat, say if it’s 2030 at £50k loss and I don’t sell my main residence at that time until 2040 at £30k gain, I’d only pay CGT on £20k despite it being different tax years

michael O'Connor

13:21 PM, 8th January 2022, About A year ago

Reply to the comment left by michael O'Connor at 08/01/2022 - 12:11
* pay zero as I’m minus £20k.
Was thinking it would have to be in same tax year but il read into that further. Thanks

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