There is always a lot to take in on budget day but one item that caught my eye in the Telegraph was the news that the government has addressed the unintended consequence of previous stamp duty legislation, resulting in some divorcees being penalised in stamp duty when buying a home to live in.
The rise in stamp duty for landlords and second home owners also caught spouses who either agreed or were ordered by the Court to keep the family home in joint names with their ex-spouse, until, for example, the children left home when the property would then be sold and the proceeds either split or retained by one spouse, depending on what was agreed at the time of the separation or ordered by the family Court.
Although many spouses dislike continuing to jointly own a family home until a date in the future for some families it is the only option in order to provide a large enough house for the children or when the mortgage company will not agree to the spouse who will be living in the property taking over the mortgage in their sole name and releasing the other spouse from their mortgage liability. After the new stamp duty legislation was passed the spouse who left the jointly owned family home was caught by having to pay second home stamp duty rates even though he or she had to buy a property to live in.
The Telegraph article reports that a family financial Court order may be needed for a spouse who is buying a second property, in addition to retaining an interest in the family home, to now be able to avoid the enhanced stamp duty charges. If spouses are agreed that the family home should be retained in joint names until a future date their agreement can normally be converted into a Financial Court Order relatively quickly and cost effectively.
If you need advice on converting a separation agreement into a Financial Court Order or advice generally on divorce or financial settlements please call me on +44 (0) 1625 728012 or contact me by email at [email protected]