Stamp Duty planning for purchasing partners plot?

by Readers Question

17:37 PM, 26th April 2017
About A year ago

Stamp Duty planning for purchasing partners plot?

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Stamp Duty planning for purchasing partners plot?

My partner (not married) owns a bungalow (principle residence).

She has obtained planning permission for the demolition of the bungalow and to build 3 houses on the plot (1 x 4bed detached and a pair of 2 bed semi’s).

My company (incorporated about a year ago to build and retain rental properties) has agreed to purchase this from her at market value £600,000. Original purchase price 2 years ago was £420,000.

£180,000 principle residency capital gain 0% tax

With recent changes my company will have to pay the extra 3% stamp duty on the purchase along with the normal stamp duty.

I have been receiving the property118 news letters regarding landlords incorporating etc.

Is there a way that my company may be able to obtain the bungalow in a similar way that a landlord can incorporate without having to pay the addition stamp duty? For example if my partner was made a director shareholder?

The plan is to sell the detached unit and retain the semi’s as rentals.

Many thanks

Matthew



Comments

Neil Patterson

17:46 PM, 26th April 2017
About A year ago

Hi Matthew,

With regards to the purchase the company is seen as the individual not the Directors and in any case you would have the same issues if it was a personal purchase in joint names.

So thinking aloud you need to keep your partner as a separate individual so she can use up her allowance of one property with no additional stamp duty.

Therefore if your partner sells to your company then when/if she buys a new property in her sole name there will be no additional stamp surcharge.

Or alternatively she doesn't sell and you do a JV together ? There is no purchase then and your company takes a share of the profit.

Please not this is not in any way professional advice and you should speak to your accountant.

Neil Harvey

21:52 PM, 26th April 2017
About A year ago

Be very wary of the idea of doing a JV. This could lose your partner the PPR relief as it would probably be seen as being a trade venture.

You definitely need professional financial advice imo.


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