Divorce, property and the stamp duty holiday
The one piece of recent good news for separating and divorcing couples was the Chancellor’s announcement of a stamp duty holiday. Who would have thought that many of us may not be able to fly off on our annual summer holiday this year but at least there is a different type of holiday. In this blog we look at the topic of property and divorce and the potential impact of the stamp duty holiday on separating and divorcing couples and cohabitees.
Online family law solicitors
As online London based family law solicitors the expert team of specialist family lawyers at OTS Solicitors can advise on separation, divorce and your financial settlement and financial court order. For family law advice call OTS Solicitors on 0203 959 9123 or complete our online enquiry form to arrange a Skype, video conference or telephone appointment.
Getting divorced and buying a new home – the stamp duty holiday
As soon as the stamp duty holiday was announced divorce solicitors began to receive calls and enquiries about how the stamp duty changes might affect separating or divorcing couples and their re-housing plans.
Firstly, let’s look at what the stamp duty changes are and how they may affect you if you are getting divorced or thinking about separating from your partner. The Chancellor has said that until the 31 March 2021 there will be a temporary cut in stamp duty land tax (SDLT) with no stamp duty charge on residential property transactions with a sale price of under £500,000. This is achieved through increasing the SDLT threshold from £125,000 to £500,000. This could result in a stamp duty saving of £15,000 per single transaction at a property purchase price of £500,000. A separating or divorcing couple needing to buy two new family homes could save a potential £30,000 in taxes.
However, divorcing home buyers need to be aware that the stamp duty holiday only relates to first homes. If a divorcing couple still own a family home then if the husband or wife is buying the new property before the family home is sold (or transferred to their husband or wife) they will have to pay stamp duty because the ‘additional homes’ surcharge of 3% continues to be payable. Therefore, if you are buying what is a second property you will still save money in stamp duty up to a purchase price of £500,000 but you will be liable for the 3% surcharge. That means if you buy a property up to a maximum price of £500,000 as a second property before the family home is sold or transferred then you will pay 3% in stamp duty. However, this applies across the temporarily increased SDLT threshold thus meaning that on a purchase price of up to £500,000 only 3% stamp duty is payable.
How does the stamp duty holiday affect divorcing couples?
If you are getting divorced or contemplating a separation the stamp duty holiday is likely to affect you in a number of ways:
- It may make it easier for you to sell the family home
- You may come under pressure to sell the family home now rather than wait until say June 2021 when the children finish their exams
- You may be asked to reduce the sale price of the family home to £500,000 to make the property more attractive to buyers
- You may need to find temporary accommodation so that you can complete the sale of the family home before the 31 March 2021
- You may feel rushed into buying a new property before the 31 March 2021 deadline at a time when you don’t feel ready to make major decisions about where you want to live after your separation or divorce.
Do you need a financial court order to sell the family home?
Divorcing couples are understandably anxious about achieving a sale of the family home before the 31 March 2021 to save on stamp duty with their new property purchase or to help achieve the sale of the family home. Many divorcing couples assume that they need a financial court order to sell the family home but that isn’t the case.
A separating or divorced couple doesn’t need a financial court order to sell their property if they are both in agreement to the sale. If you can't reach an agreement over how the equity in the family home is split between you then a divorce solicitor can hold the money until either an agreement is reached or you secure your financial court order from the family court.
Buying a property with a new partner
In the rush to save on stamp duty and buy a new property before the end of the temporary stamp duty holiday a divorced or separated person may feel under pressure to buy a new home with a new partner far sooner than they may otherwise have chosen to do so. Divorce solicitors recommend that if you are buying a new property jointly with a partner that it is best to enter into a cohabitation agreement. That way if the new relationship does sadly break down there is a clear record of how the equity in the property should be divided between you. In addition family law solicitors say it is best to get a new Will prepared if you are buying a property with a new partner so that if anything should happen to either one of you then your share in the property will pass in accordance with your wishes rather than under intestacy rules or under the provisions of an old Will prepared and signed before your new house purchase.
Divorce and family law solicitors
The London based online family law solicitors can answer your separation, divorce and your financial settlement questions. For family law advice call OTS Solicitors on 0203 959 9123 or complete our online enquiry form to arrange a Skype, video conference or telephone appointment.