Stamp duty? Self build joint venture

M

mwhich

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Hi all
Myself and my boyfriend are planning on building on his land and will shortly be going about getting a mortgage. I'm a first time buyer whereas he bought an investment property about 8 yrs ago and it was sold in 2006.
Does anybody know what the implications of this with regard to stamp duty and first time buyer mortgage rates etc?

Thanks very much in advance
 
Re: Stamp duty?

Stamp duty may or may not be an issue. Think it through logically:

1. He owns land. If he needs to transfer it into joint names then you will pay stamp duty at non residential rates on the value of the land passing to you.
2. If he got the land as a gift in recent times, there may well be gift tax issues.
3. As you are building a house, there is no stamp duty on that.
4. However, as you do not have the money to build, you need to borrow the money. How much do you need to borrow?
5. Could he borrow the money in his own name? That would mean you are not on the title. How would you feel about that?
6. Do you intend to get married? That affects stamp duty.

mf
 
Re: Stamp duty?

Thanks mf
to clarify;
1. He doesn't own the land yet. His parents will be gifting him the site.
4. We will need to borrow between 200k & 230k. The size of the house will be approx 2600sqft.
5. Borrowing in his own name isn't really an option we have explored. I currently earn more than him so we would be in a better position to get a joint mortgage I would think.
6. We do intend to get married but hope the house will be built prior to this.
 
Re: Stamp duty?

So its not his land!

Right that changes everything. Now, you're looking at stamp duty and CAT - gift tax. He can probably avail of the site transfer stamp duty exemption but, crucially, you can't.

I think you need to sit down with your own tax adviser and look at all the ramifications. I suspect also that to borrow that type of money, you will both need to be both on the title and on the mortgage. This means you both paying stamp duty on the value of the site and probably gift tax. You should also consider putting some form of agreement in place should the relationship break up.

mf
 
mwhich - Please be a bit more specific in the title - I have changed it to avoid clashing
 
Thanks mf. Will do a bit more research so. I didn't realise I'd be liable to stamp duty.

Thanks again for your help.
 
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