Q My partner and I are paying £333,000 to buy a 45% share of a flat costing £740,000 under the shared ownership scheme.
Does it make sense to pay the stamp duty all at once in the beginning, or should we only pay the part for the 45% share and pay the rest when we staircase above 80%?
CO
A When buying a shared ownership property in England or Northern Ireland, you can choose between paying the stamp duty land tax (SDLT) bill all in one go – called “making the market value election” – or in stages.
Making the market value election is the obvious choice when the total value of the property is under the SDLT threshold of £250,000 or £425,000 for first-time buyers because there is nothing to pay. In your case, the standard SDLT threshold of £250,000 applies (even if you are first-time buyers) because the property costs over £625,000, so paying the SDLT all in one go would mean paying out £24,500. However, paying SDLT only on your £333,000 share brings the bill down to £4,150.
If you choose to pay in stages, after making the first payment no more SDLT becomes due until your stake in the property goes over 80%. How much SDLT you have to pay is explained on the government websiteand involves a relatively straightforward formula.
Whether to pay it all at once or in stages depends upon your plans for future. Might you end up moving before your ownership reaches 80%? If that’s a possibility it makes sense to pay only the amount due on your share now. If it is a long-term home, and you are certain you will staircase to 100%, then paying it all now makes more sense if you can afford it.
