Q My partner and I are purchasing a flat through the shared ownership scheme. We will be paying £333,000 for a 45% share of a property that costs £740,000. Should we pay the stamp duty in one go at the beginning or only pay for our share and pay the remaining amount when we staircase above 80%?
CO
A When buying a shared ownership property in England or Northern Ireland, you have the choice of paying the stamp duty land tax (SDLT) in one go or in stages.
Opting to make the market value election is the logical decision if the total property value falls under the SDLT threshold of £250,000 (£425,000 for first-time buyers) since there will be no payment required. However, in your case, the standard SDLT threshold of £250,000 applies, even if you are first-time buyers, due to the property’s cost exceeding £625,000. Paying the SDLT in one go would result in a payment of £24,500. On the other hand, paying SDLT only for your 45% share would bring the amount down to £4,150.
Alternatively, if you choose to pay in stages, you will only need to make the first payment until your ownership surpasses 80%. The government website provides detailed information on how much SDLT you would need to pay, using a relatively straightforward formula.
Your decision to pay the SDLT all at once or in stages depends on your future plans. Are you considering moving before reaching 80% ownership? If that’s a possibility, it would be wise to pay the amount due for your share now. However, if you are certain that this will be your long-term home and you will eventually staircas to 100%, paying the SDLT in one go makes more financial sense, provided you can afford it.
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