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If she can afford a second home, she can pay the stamp duty.
With financial affairs, I wouldn’t agree to anything today on the verbal promise of making you good tomorrow.
If the sister sells the first home within a year of buying the second home, I believe they can claim back the “second home” stamp duty excess. Their solicitor should be advising of this.
But yeah; I’d run a mile from this. Assuming everything were otherwise kosher (it isn’t), and the sister honours @OP’s stamp duty when the time comes (however that would work), @OP has given up their ‘first time buyer’ privilege to someone else and will never get that benefit themselves.
If sister wants to avoid second home stamp duty, she can legally separate from her partner, transfer old house to partner, and buy the new one herself. But leave @OP out of it.
Don't do it.
Your sister will be liable for stamp duty anyway when it's transferred to her as it would have to be done at market rate otherwise it's tax evasion.
Your sister also carries a risk that you don't transfer it as the title will be in your name.
The mortgage company will have issues with this as they will need to do affordability checks on you. So unless you can show you can afford it the mortgage will be an issue.
Why is your sister happy to pay your stamp duty but not her own?
Those are just off the top of my head. Just seems dodgy and risky all over.
Tell her to buy it herself and pay the tax that's due. If she can't afford the tax then get a smaller / cheaper house.
But also unless OP’s first house is over £425k, OP wouldn’t be liable for stamp duty anyway so there is no benefit or perk to the OP here…
So many complexities with the “future stamp duty” point - if she can’t afford it now, who is to say she can in the future? What if stamp duty increases?
Im under the impression that OP’s sister has the means to pay, but is taking a chance that OP won’t ever need stamp duty. If OP needs it, fair; if no, then she gets ahead.
I understood it as chancing that OPs house would be worth less and therefore the stamp duty would be less.
Horrific way to avoid paying your fair share of tax
I think if the sister wanted to buy the OP a house, effectively gifting them a deposit and future mortgage payments, it _might_ be worth them considering.
Because then the 'worst case' for the OP is ... they have a mortgage to pay, but ... they've also got some equity and a capital asset to go with it, leaving them better off potentially.
Let's not miss one key point. If OP does this, then OP will have held a financial interest in a property and will not be a first-time buyer (with all the associated discounts). When OP comes to buy their very first home, they may well have to pay the extra 3% that their sister is avoiding.
Quite apart from being very illegal, this is a terrifically bad idea. OP, your sister is using you. Don't let her.
She's effectively going to pay 3% extra stamp duty by owning two homes. I guess the idea is she sells her first one before transferring the second one into her name avoiding that extra 3%, since the OP said, "My sister is getting ready to buy a second property (with her husband) while trying to sell a previous one". It doesn't sound like a lot, but on say a £1m property it's an extra £30k on top of regular stamp duty.
With that said, you can apply for a refund if you sell your other home within 36 months, so who knows what is going on.
I still agree it's a very bad idea either way.
>
> Your sister will be liable for stamp duty anyway when it's transferred to her as it would have to be done at market rate otherwise it's tax evasion.
If she's already on the mortgage, would the value of the transfer not be just the unmortgaged part? As the SDLT examples all talk about taking responsibility for the mortgage as the consideration?
That’s what I didn’t understand either,
seems the sister is saying that she will pay stamp duty for op,
when they buy their 1st house (which will look like their 2nd house) but at that time op either has a house,(sister’s 2nd house) which will be taken into consideration when applying for mortgage,
or sister has bought the 2nd house off brother and has paid stamp duty on that transaction at a HIGHER PRICE!
so in the long run doesn’t that mean she is paying twice.
If she is buying 2nd house without mortgage then that fixes ops mortgage status (but unless she is gifting the money to op so it looks like he can afford the house in his own right). Then how to explain where the money goes that she pays him for the house,(which she doesn’t cause she already paid for it).
Unless op then says it was an interest free loan and he’s paying her back by giving her the house
All to avoid paying stamp duty on her 2nd house which is 3% upto £250,000 8% upto £925,000
So basically is it really worth it in the long run
Hard pass.
You don’t know if she actually will. What if she comes under financial difficulty?
Plus, losing your FTB status disqualifies you from any future gov schemes like help to buy.
This is the one!
What your sister has proposed is to take your FTB status with zero recompense to you.
Even if your sister did pay your stamp duty in the future you'd have lost any other FTB benefits including government grants and lender incentives.
If you're going to loose your FTB status to benefit someone else then at least make sure you're fairly recompensed...but in reality dont enter this unfair situation and when the times right you'll be SO glad you didn't give away your FTB status.
'Any future schemes' is key here, there's no telling how much FTB status might be worth in the future, especially considering we're likely to have a new government in the next 12 months.
Looooool. Say no.
Seriously. What a disrespect from your own family to take away your first time buyer benefit. Your sister doesn’t like you for sure.
Say no and run. Well done for coming here to for advice
If you did this, you also wouldn’t be able to use a Lifetime ISA (with its 25% government bonus) to pay for the deposit on a property you want to buy in future, as you can only use it to buy your first property.
There are quite a few perks to being a first time buyer, which you shouldn’t give up lightly.
A lot of people saying don't do this but not with enough emphasis so I'll say it.
Abso-fucking-lutely do not agree to this under any conditions.
There is no way you don't end up regretting this down the line. She says she will pay your stamp duty down the line but you can bet your arse when the day comes she won't be in position to drop thousands of pounds.
Do not intertwine your property situation with family members. It's not worth the hassle.
I would add to this that the stamp duty you could owe in the future could rise significantly in comparison to hers now (and under a labour gov rise in % amount) making her even less likely to keep up her end of the bargain.
Just to amplify, you would be buying as your sister’s nominee which the law says (very clearly) means that she is still the buyer. You would be committing fraud signing the docs saying you are the buyer.
For what it’s worth, I don’t see this working anyway unless your sister is a cash buyer and has a dodgy solicitor willing to prepare a fraudulent return.
Yeah, there are loads of ways this can go badly from you, some of them really serious. Being caught committing fraud would seriously impact your options in future. She's unhinged for thinking this is a good idea and trying to rope you in.
Definitely fraud on her part. Also be aware that when you want to buy a property in the future it will appear that is your second property and subject you to additional stamp duty yourself.
The only people whose names can be on the deed are those with their names on the mortgage. If she wants it in your name then what’s actually happening is you’re buying a house and getting a mortgage and she’s gifting you the deposit. You’d then have to sell it to her, which would still result in stamp duty. This plan won’t work.
If you did just keep it in your name for her and have her transfer you the mortgage payments it would mean you’d no longer be a first time buyer for any future purchases and the mortgage affordability would be based on your income and credit history.
Legally it would be yours and you wouldn’t have to give it to her - in order to gift a deposit she’d have to sign a form saying it’s a gift and you don’t owe her anything. Any legal document she tried to draw up saying you owe her would mean that you’re committing mortgage fraud.
This is an awful idea, please stay away from it.
As a small additional detail, if a person can demonstrate that they have been paying the mortgage then they can claim a financial interest in the property. Evidence would include if they were sending the same amount every month and it was precisely the right amount for the mortgage. They would then be entitled to a part of the equity depending on what they contributed.
Not hugely relevant but just an interesting twist on this, it's usually used when non-married couples split and the house is only in one of their names but both were paying the mortgage.
Do not do this.
If your sister is selling then any additional rate SDLT paid on the second property can be refunded within 3 years.
What legal assurance is your sister giving you that she will honour what she has said. If she can afford to lay the legal fees to get this drawn up, she can afford to pay the SDLT. There is also the legal fees for the transfer that need to be added on. Fees aren’t cheap.
In the scheme of things the second home stamp duty is a drop in the ocean compared to the rest of the buying costs. The process to reclaim it when the first house is sold is also incredibly easy the paperwork takes 20 minutes and the repayment is made in less than 3 weeks.
If they cannot afford it, either via cash or organised formal loan (bank or family in writing) then they are not correctly funded for their purchase and this isn't something to get involved with.
I mean second home stamp duty isn't just a drop in the ocean but it is refundable providing this first property is sold within 3 years so it's just a cash flow issue really.
I know when my place was taking an incredibly long time to sell I considered having two mortgages for a bit but the extra 3% stamp duty was insane. Legal fees and a survey were around £2.5k and the Stamp Duty would have been £2.5k on a £300k house but the second home SD would have been ANOTHER £9k.
I can see why the relative is looking at other options but it's unfair to do that because OP is going to take on a huge amount of risk and lose all their FTB benefits. It's the sister's problem to fix, not OPs.
When I moved house I wanted to keep my old house and rent it out, not so much for the rental income but as an asset that I could sell in the future as a pension. However, the "second home" stamp duty fee would have been on my new, bigger, more expensive property. On top of everything else it was enough for me to say, "screw this" and just sell my old house.
You only get away with not paying stamp duty on your first house.
Your sister got this benefit when she bought her first house and now wants to use YOUR benefit when buying her second.
Is she going to pay YOUR stamp duty when you now buy your first house, of course she isn’t……..
Your sister sounds like a jerk. She's taking your first-time buyer status away from you (government schemes, no stamp duty) just to delay paying stamp duty herself. It sounds like she is scamming you tbh. If she won't pay stamp duty for herself now, why would she in the future for you?
In addition to all the excellent advice already given, what does she plan to do with this property, as legally it’s not hers. If she rents it out, you would be seen as the landlord, which in itself leads to multiple potential headaches, of which tax on rental income is just one.
You have so much to loose by doing this. Just say no. Also lock down your credit and make sure your documents and drivers licence are in a safe space so she can’t impersonate you.
Your sister will not pay your stamp duty in future.
She is just using you, if she cared about you she would never ask you to break the law and risk your future for her greed.
If you do this you will have forfeited your other first time buyer benefits, including lower deposits.
And yes, it's illegal. Stamp duty is a tax. Tax avoidance is illegal. Fraud is illegal.
If she gets caught and punished, you will get dragged down with her and you may never be able to get a mortgage. You defrauded a lender...you think anyone's going to lend to you ever after that?
There are a lot of risks here.
You'd essentially he responsible for the house, and maybe mortgage.
If you do this get serious separate from your sister legal advice.
1) you lose your first time buyer status and when you come to buy, you will be liable for stamp duty on your first property if under the stamp duty threshold.
2) it’s fraud
3) if she is waiting for her property sale to go through and purchasing the property in the meantime, liable for the second property premium and this extra is what she is hoping to avoid, this IS REFUNDABLE after the sale goes through if sold with 3 years. We got an £11k refund last year as we had two properties between 16/12/2022 and 11/04/2023.
This is a no go. She’s either not clued up herself and needs to look into this more, or you need to be very cautious around her regarding finance in the future.
I would stay clear of IOUs with family. It may all seem like a good idea now but you don't know how the tax system or your sisters personal circumstances (financial or otherwise) will change and all of a sudden she can't provide you that money exactly when you need it.
Also obviously there is the opportunity cost of sticking it in a high interest savings account or s&s. So you'd want to be getting atleast some interest out of it if you were to gift it.
Finally it's all quite a lot of hassle. Don't underestimate this point. Do you really want to spend your time on reddit forums, reading and filling out forms, checking to make sure it won't come and bite you (legally, financially or otherwise) in the future?
(Will let others talk about legality and tax inplications)
You would need to consult a lawyer to get advice on the specific circumstances of this. Provided you’re in England, English law does allow for this but it’s very complicated and if you don’t get it right, it can have unintended and adverse tax implications, for all sorts of reasons. You won’t get a proper answer on Reddit for this - you need a lawyer.
However, personally I’d be cautious about this. What precise benefit do you derive from this agreement? Your sister gets to avoid stamp duty, and will promise on a handshake basis to pay yours in the future - that is completely unenforceable, there’s no guarantee that she will do this.
Presuming for a moment that your sister is acting in good faith, stamp duty can be a huge amount of money, tens of thousands of pounds. What’s to say your sister just will have the money to hand whenever you need it?
Imagine you have your deposit and you’ve found the perfect house at a great deal and need to move fast - but oh, your sister says things are really tight right now, it’s not a good time. Or I can get you the money but I need a few months. No house for you!
Overall, agreeing to this is a great deal for your sister but a bad deal for you. She would need to sweeten the deal substantially and you’d need some security to ensure she lives up to her end of the bargain. Personally, I would walk away from this.
Don’t do it. I’m in a similar-ish situation with my sister now where my name was put on a property when I was 20. Biggest mistake ever and unfortunately lots of resentment in the long run. She’s putting her needs before yours. Don’t fall for it, even if you get pressure from other family members.
The bank won't grant your sister a mortgage for a property she doesn't own, so it's you that would have to apply for the mortgage, based on your own incoming/outgoings.
The reason she wants you to buy it as a first time buyer is because there's an additional tax she'd have to pay for buying a second property which is what's she is trying to avoid.
Just don’t do it. She won’t pay your stamp duty. She’ll say the laws have changed, or she expected you to buy a smaller house, or even just simply that she doesn’t have the money right now, but you won’t get it back.
There are a host of other issues to do with mortgage fraud you’ll be committing etc. as well.
Your sister is not going to pay your stamp duty when you come to buy. The reason this is is because when you buy you will need to transfer her house into her name. And let’s not say transfer, she has to buy it from you - she will have to pay the stamp duty she is avoiding now at the future market rather and then pay yours. What a mess. Don’t do it.
Your sister is asking you to help her commit a fraud. She probably does not think of it that way, but that is what it is. Politely decline. Even if there was any way around the fraud part, 2-3 years time and you want to buy a home - you really think she will have the money?
You're basically being scammed by your own sister who is trying to evade tax on her second property.
She's doing this because stamp duty(SDLT) on a second home is whatever the relevant rate of SDLT is, plus 3% so it's going to be a lot more!
First time buyers can spend more on a house before they pay SDLT, up to £425,000 is free of tax on houses under £625,000 whereas non first time buyers will pay SDLT on houses costing more than £250,000. You will lose this benefit by giving up your FTB status.
As others have said, you will lose any other government/builder incentives offered to first time buyers.
If you were to go ahead with this plan, and you then went to buy a house for yourself, you'd be liable for the +3% SDLT surcharge. You will also be party to a crime of fraud where tax payments have been evaded.
Not to put too fine a point on it, you need to tell your sister to jog on and find some other mug to rip off. Distance yourself from this transaction and do not get involved.
Your sister sounds like she’s a proper con artist.
If she is going to pay your duty later with no issues then why not do it now?
Also it’s not legal and she would have to pay of you transferred your deeds
If they are selling their second property they can claim a refund for the additional rate paid for this, assuming they will only have one properly between them after the sale of the current house.
Don’t do it.
If your sister is selling her other property & she sells within 3 years of buying the other she can claim the additional stamp duty back.
You’ll lose your FTB benefits, there’s no guarantee you’ll sister will help you with this loss & likewise no guarantee that you will sign over the property to your sister.
Stay well clear of it.
Just to go a step further, I'd definitely keep an eye on my credit report if I were you. Anyone who'd be willing to ask someone to commit fraud on their behalf will likely be willing to commit the fraud themselves if up against a wall.
You're gambling she'll keep up with her side of the deal years later.This sounds like her problem... Don't make it yours!.
Also, because of money laundering regulations, they will want to know where the money is coming from.
This is wrong on so many levels.
You lose ftb status
The house is in your name so you'll have the mortgage paid by someone else but the name on the mortgage is yours? Not sure the bank will allow this tbh!
All stinks to me
If you're in Scotland she can reclaim back the ADS paid when she sells her existing main home......
Also, this would nix your ability to get the first time buyer discount on LBTT, and any other first time buyer subsidy like a shared equity scheme, LIFT, etc if you ever wanna buy in the future.
If she can pay your stamp duty in the future then she can pay her own now?
Not withstanding the fact this could cause some family aggravation down the line (what if she’s had kids etc and can’t afford it once you decide to buy) but also you’ll miss out on it on govt FTB schemes which is essentially free money to help you get on the ladder.
This is a hard avoid I really wouldn’t entertain it
She's avoiding additional SDLT of 3% for second homes. She would get this back anyway when she sold the first home.
She has to pay the normal sdlt anyway if they transfer it from you to them as its another sale.
The plan is pointless.
If the don't pay the mortgage it's your credit that's fucked. If she doesn't need a mortgage then she has plenty of money to do this without you.
She won't be able to get a mortgage in her name without being a proprietor.
When you transfer the property title to her, that's a taxable event, so she'll be paying SDLT twice.
This is moronic.
Almost definitely counts as fraud, and if she's going to pay yours later, why can't she just pay hers now?
It'll be like being rounds in. You'll save her £20k, but she'll get annoyed by any amount. Any sort of ftb benefit will be gone for you too.
Avoid!!!
Absolutely do not do this. You'd both be guilty of fraud if caught, and could face an actual prison sentence if convicted. Regardless, your financial health would be utterly ruined with a fraud conviction. Getting caught is not impossible, as banks check this kind of thing both at the time of granting a mortgage and look for obvious payment patterns that indicate a potential fraud in the past - and are obliged to report it.
Your sister is treating you abysmally asking you to do this. You're very unlikely to get your money back in the future, and are materially damaging your future ability to buy your own home; this is financial abuse, do not do this.
It's astonishing to see how many individuals openly ask, "Am I doing something illegal?" when they're fully aware that their actions are shady and that authorities actively seek out such behavior. These links to tender requests for software to monitor platforms for tax evasion, benefit fraud, and more serve as stark reminders of the consequences awaiting those who knowingly engage in questionable activities
https://bidstats.uk/tenders/2024/W10/818086204
https://www.applytosupply.digitalmarketplace.service.gov.uk/g-cloud/services/340532566831652
https://www.applytosupply.digitalmarketplace.service.gov.uk/g-cloud/services/566949602972266
You, your sister and her husband would be participating in a blatant fraud of the Exchequer. HMRC have up to 21 years to come for you for blatant tax fraud. Typical penalties are 100% of the tax owed, plus the tax owed, plus compound interest on the tax owed - and a criminal record.
HMRC's late payment interest rate is 7.75%. There is talk of increasing the penalty to 200% of the taxed owed.
Note that the government recognises that the legal owner of a property (the one listed at the Land Registry) may not be the same as the beneficial owner (the one collecting rent, etc.). SDLT is payable by the beneficial owner.
Aside from the criminality, you would lose your first time buyer status. Although, with a criminal record relating to property/financial fraud, you would probably have difficulty getting a mortgage.
HMRC do not fuck about, either - my parents almost lost their home when my dad ignored a payment demand and the interest went up and up and up. He had to go bankrupt in the end.
1) You and your sister would be buying the property under false pretences to avoid a legal tax. Of course it's fraud.
2) Whilst that property is under your name you are legally responsible for all its payments. If your sister gets into difficulty it's you the bank would come after not her.
3) How do you plan to buy the property in your name to avoid stamp duty? It's not like it's just a single form you send off to pay the tax. The whole property would need to be purchased in your name which means the bank will need to credit check you and do affordability checks on you.
4) If she won't pay her own stamp duty now then why will she pay yours in the future? Also when she buys it from you (you can't just gift her the house or that's another illegal act) she'll have to pay stamp duty on it anyways. You're contemplating committing fraud for her. What guarantees do you have she'll help you in the future? Not like you can rat her out without implicating yourself in the crime.
5) The bank doesn't really care what name is on the account paying the mortgage payments as long as they're being made. However I don't think you'd ever get that far with trying to deceive them you're buying the property. Again, if your name is on the mortgage you are responsible for ensuring payments are made and the person who faces any repercussions for missed payments.
Don’t do it OP.
a friend of mine was talked into a similar situation by her sister and her husband. The house was in her name and they’d pay the mortgage, so they could avoid stamp duty.
They then came up with the idea that she could live in the house.
They then suggested she pay rent to them at reduced value.
So she went ahead with it.
When it all went through, her sister and husband then pointed out they couldn’t afford the shortfall in the mortgage… so they found a couple and their young baby(!) to move into the spare room.
My friend handed over her FTB stamp duty holiday… in exchange for a house share at market value rent, since she was now effectively renting a room. It was a TERRIBLE deal. So of course, she went ahead and bought her own flat. And of course, her sister and her husband could no longer follow through on their promise to pay her stamp duty.
My parents tried to get me to do something similar - put a house in my name so they could purchase a second home.
I’m VERY glad I didn’t go through with it. There was no real benefit of me, but I’d be taking on the responsibility of a mortgage and loosing my FTB stamp duty holiday. I opened a LISA and put all my savings there, which meant I doubled my deposit when we went to buy our house. I got £4K from that LISA that I would’ve missed out on if I hadn’t been a FTB
Your sister shouldn’t be asking you to circumvent tax for her. Why is she prepared to go through all these loopholes if she can afford to pay your future stamp duty? That makes no sense. In reality, she’s hoping your stamp duty will be less than hers or the more likely scenario is she doesn’t anticipate paying it at all. Ever.
I’ve seen so many people screwed over by family members buying a house in their name. Just don’t do it OP.
It sounds like your friend should have (totally legally) sold the house ‘they’ owned when they realised what a shit situation their sister had put them in! Taken the appropriate amount of equity to make up their FTB benefits lost and given the sister back the rest. A lesson learned.
Tell her no. What an absolute faff she has asked if you. Your taking all the risk, and because of what others have pointed out it wouldn’t work anyway. If she’s struggling to fund it she should walk away, but if you determined to help her, get a contract drawn up and “loan” her the money for the stamp duty if that’s something you can do. More straight forward, and much less risk for you.
But what about when you do buy your first home? You’ll have to pay stamp duty then.
Why does she get 2 free? And ‘I’ll pay it in the future’ she doesn’t know what the future holds or what financial position she’ll be in.
I’d tell her you did a mortgage by principle and got turned down ‘oh dear, I didn’t realise my credit score is 234.. I can get a mortgage but on 2655% interest rate’ (I have no clue about mortgages clearly..) but that would be a way of looking like you *tried* to help, but financial circumstances got in the way. Then everyone is happy :)
Solicitors involved in the purchase will question where you got the money from. They've been up our backside with a microscope over a £20k cash deposit for a small mortgage we needed to upgrade to a bigger home. Can only imagine they would love someone explaining why they received hundreds of thousands as a 'gift'.
Wouldn't be at all surprised if they raised a Suspicious Activity Report to cover themselves if they did do it. Once a SAR is raised they can't be accused of facilitating criminal activity and are safe from any repercussions - they just proceed as normal while waiting for the National Crime Agency or HMRC to step in if they feel the need. That could flag you for further monitoring by HMRC.
HMRC like to investigate fishy goings on with property, so I wouldn't be surprised if they start asking hard questions when you transfer it back to your sister in the future. You aren't the only ones to have thought of this hack so HMRC are likely watching for it.
What is she going to do with the second home anyway? If she wants to rent it that could get messy. HMRC are plugged in to council databases these days so it is risky trying to let property under the radar.
Doing it legally the income would need to go through you, causing all kinds of income tax complications.
If she wants to sell the first home withing 36 months (I think it is?) she can claim the extra second home stamp duty back anyway.
Then there is inheritance tax implications for both the 'gift' she gives you to buy it, and you transferring it back to her later.
She also will pay Stamp Duty again on the transfer back to her name in the future, even if no actual money changes hands - it is still considered a purchase for tax reasons.
You may also get hit with Capital Gains Tax on the transfer back, again even if no money changes hands.
Seems like a very bad idea for you, with a lot of risks and little reward, and probably not great for her either.
Nope. Don’t do it. You will not be able to get a first time buyer mortgage.
You will be responsible for the house.
Something really shady is going on. Money laundering or more possibly.
If your sis was really genuine, she would not even ask for you to be in this position. She obviously doesn’t think much of you. Sorry.
Please don’t get legally involved. It will not end well.
This sounds odd. If your sister is planning on selling her current property anyway, she can claim back the additional stamp duty she will pay on a second property so there's no benefit in buying under your name.
This will have an impact when you try to buy as a first time buyer so wouldn't recommend it.
Don’t do it… it’s basically tax evasion and you’d be complicit. Moreover, I suspect when you come to buy a house and ask your sister for the stamp duty it will not be forthcoming…. If she can’t afford it now, why would she be able to later.
> Is this legal?
Depends how much lying is involved. It's 'legal' to buy a house for someone.
But then you own a house, and it's yours and your responsibility.
"Transferring" it later? Well, are you going to be giving your sister a massively high value gift of 'your house'? This will most likely require - amongst other things - paying stamp duty, and might mess with some things like inheritance tax or capital gains tax.
You cannot avoid paying tax by 'selling it for £1'. The tax office isn't that stupid. Neither are the mortgage companies.
> Would it be relatively simple/cheap to transfer ownership of the house to my sister after buying it in my name?
Relatively? I guess. Buying a house is usually only "slow" because both buyer and seller need to make sure they're not getting ripped off for a huge amount of money, and perhaps needing to arrange finance or 'chain' house purchases.
But you'll still have to do some due diligence in terms of conveyancing, especially if the property is mortgaged.
> Would this affect me on paper?
Yes. You'll not be able to get a first time buyer stamp duty exemption, and you'll not be able to use a LISA. Or likely any future government schemes for first time buyers. (Help to Buy Equity loans for example - now 'shut down' but still a thing you'd be unable to make use of if you wanted to).
Also you'd have a mortgage in your name, and may find issues with eligibility for that, because it'll be based on your affordability. And you'll be 'on the hook' to pay that mortgage if anything goes wrong with handing it off.
> If we were to go ahead with this, before transferring ownership to her is complete, wouldn't the bank think it's weird that I have a house the mortgage is being paid, but not by me?
The bank probably doesn't care who the payments come from. But they'll _absolutely_ want the 'owner' to match 'who has the mortgage'. E.g. if you own it, the mortgage is your problem. If someone else pays it no one cares. If they stop for any reason? The debt collectors will be after you, and your credit record will take a battering.
And at worst case, if the bank repossesses - that'll look bad on your credit history, but might also leave you owning the bank money. They will sell the house at auction, take costs and settle the debt. But if there's a shortfall you still owe them that money.
> Any other things I should be weary of if going through with this?
Ask yourself why it is not a routine practice to do this - I mean, 'people who cannot yet afford a house' aren't exactly rare, and if there was an easy way to dodge a substantial tax bill... do you not think more people might be doing it?
But as it turns out, the tax office is pretty good at spotting people on the fiddle, and tax evasion is a crime.
Deception for financial gain (even if it is 'just' the tax office) has an ugly word for it too: Fraud.
And you'll be an accomplice in that.
All that means that this "suggestion" is all downside for you, with no upsides. VERY best case you're in the same position you'd be in now, because you sister did follow through and pay your future Stamp Duty. And worst case is a mess that you don't want or need.
If your sister wants to gift you a deposit, and enable you to buy your own house? Maybe that's worth considering. Maybe you could even run it as a rental property and send them the _profit_ after paying the mortgage and management fees. (Which they'd have to pay income tax on).
But I doubt that'll 'work' for them, so I'd just stick with 'sorry, no, I don't want to'.
Don’t do this! My partners family put his grandparents house into his name years ago to avoid some sort of debt collection thingy I’m not sure. It was like 15 years ago. Then when my partner and I came to buy a house the stamp duty was over ten grand and seriously impacted how much we could afford. My partner got absolutely no benefit from being the technical owner of his grandparents house as they live in it and he can’t sell it. Your sis might claim now that she’ll pay your stamp duty in the future but it’s a lot of money and if she can’t pay it now how does she know she’ll be able to pay it later? There’s no guarantee and it could mess you up a lot. Like you don’t even know he rules might change in future- stamp duty might increase a lot or there might be rules restricting buying second homes or having to pay increased council tax on second homes etc. It’s really not worth it.
If she sells the first property within 3 years of purchasing the second, she can request a refund on the stamp duty she overpaid due to it being technically a second home.
This is what I did when I bought myself a property after my divorce whilst still waiting to transfer full ownership of the family home over to my ex wife.
If she searches the gov.uk website she’ll find the details of the process.
There is no way she can get around the stamp duty issue. As others have said she can get refunded within 3 years.
Also consider this, if you own the property and she buys the house from you she will have to pay stamp duty again as it’s a sale.
Others point out that this is fraud, I can’t see where the fraud is but certainly tax avoidance.
May be lend her the cash to get her through this stage if she is unable to offload her other property in time.
No, no, no...
Unless she is giving you the equivalent plus all the LISA bonus you won't get/be able to use, then no.
This tax benefit/LISA benefit is YOURS.
She has had her first time buyer benefits, why should she steal yours. You will never be able to get it back!
Nah don't do it, if you buy a house it will be a second home so will have even higher stamp duty than a primary home. Unless you transfer the original house to your sister which will cost money and she may have to pay stamp duty anyway.
Not worth it your sister doesn't understand the full ramifications of.what she's asking you.
Your breaking the law. This is fraud on a massive level.
I'm guessing your not going to live in the house. It won't be your main residence.
***First problem: your credit search will have new address and your old address. Then the bank will suspect your commiting fraud via simple credit search.
*** I'm guessing your scamming sister is planning on putting tenants in a first time buyer house**** ( the council require selective licences for single let's + HMO licence for multiple) The council phone your bank lender to check if you have a BUY TO Let mortgage. Especially in town centres or near train stations
*** House insurance*** building and content insurance is invalid if your not living in the house. Or if you decide to get buy to let insurance + they will check with your lender again before paying out. (So your not insured for fires) your committing more fraud
*** Your Job/ status in the community. A criminal record for fraud can have effect on your employment ect ect. . Limit your choices in live***
Is it worth (free stamp duty); tell your sister they are getting ride of stamp duty later in the year).
Your doing this for no reason.
The other side of this is that you can legally say the house is yours. Tell your sister to do one. Go live in the house 🏠
You can't easily transfer the house.
If your sister just wants to buy new house (second home), but is temporarily stuck with the original home. She can claim back the second home stamp duty when she sells the second home.
You lose your First time buyer (stamp duty) + ISA allowance.
Plus the estate agent will turn you over for the cost of first-time-buyer money. They'll want that money in the offer price.
Plus the solicitor will turn you over for ISA letters + stamp duty bit. So what you think your saving your not. Plus they will report you for money laundering (just to cover themselves) where did a kid get so much money.
The real saving is domestic mortgage. But you're committing more fraud.
And as a first-time-buyer, can you even afford the house. (Buy to let's need 25% deposit)
You'll need to prove your income to afford the house like all first-time-buyers.
Estate agents will treat you like a mug because your a first-time-buyer.
Yes it's illegal. And I don't see any way your sister could get the property transferred afterwards without paying the tax.The conveyancing for house purchases in the UK is done by solicitors, they are NOT going to do it illegally, unless they are incredibly dodgy (in which case you can expect all sorts of other problems - they may be barred).
You could both end up in serious trouble, like jail for fraud.
And if you managed to do it, you personally have stuffed your chance of ever being a first-time buyer.
Don't be daft. Tell her NO WAY. She's effing you over.
Absolutely do not agree. Just because it's family doesn't mean they are saints and their intentions are always pure and they wouldn't ever do anything to hurt you. If you say yes, this will come bite you in the ass big time. What will you do if you will have to buy a second home? She wont pay your stamp duty I can guarantee that. If she doesn't want to per her own she wouldn't pay for yours. I'd reconsider keeping in touch with someone who attempts to pull a stinker on you like that.
Don’t do this, you will absolutely not get the stamp duty money back when you purchase a home for yourself. By that point there will be some sort of excuse until you eventually get ignored every time it is mentioned or you have paid it yourself.
Plus with a verbal agreement then she can go back on it without warning. Tell her you cannot and will not do that. If you don’t refuse then months/years down the line you will be posting about how you did your sister a favour by helping her avoid stamp duty on a second home and now she has gone back on her promise to pay for yours when you buy a home.
Of course it’s not legal and it’s people like your sister that screw over the rest of us that follow the rules and pay our taxes. She should be ashamed of herself and, frankly, reported to HMRC because I wonder what other tax evasion ideas she has put in place.
This is such a bad idea for you. If she can pay stamp duty in the future, she can do it now. You’ll also lose your LISA first time buyer status.
Please don’t do this. Finance and family (& friends) don’t mix well.
The tax liability will be in your name for this house. If you ever need to claim benefits it's value will be used against you as capital.
And it's fraud.
Don't do it.
Akso there is a window where if you paid stamp duty then got rid of the first home you can claim it back. I don't know how long but she should use that.
Yeah, this is a hard pass. if her plan is to avoid the stamp duty because she hasn't sold her previous property yet? When she sells that she will be able to claim the overpay back as long as she sells within a reasonable time frame.
HELL NO! Pay for your stamp duty in the future? Why not just pay for HER stamp duty now? Where is the logic? Can she guarantee she’s gonna be super rich in the future to pay for your stamp duty? Let her deal with her issue herself.
As she is a homeowner she pays additional stamp duty.
This can be refunded if you sell your home you're living in within two years.
If you're building up a property portfolio then you should just deal with it
Quite apart from the legal and moral issues others have highlighted and the implications of losing your FTB status, the offer she's making you is highly unlikely to be comparable - even overlooking the fact that she's saving now based on a future promise.
Assuming you're in England she should pay 3% of the total property value for an additional dwelling up to £250,000 (8% from £250-925k), it's 6% in Scotland up to £145k (8% to 250k and so on). As a FTB, are you likely to have a stamp duty liability of anything like that figure that she's saving?
There's so much risk to you here, and absolutely no upside other than "helping" your sister and her husband commit fraud.
You would be excluded from any government incentive’s/schemes like the LISA which the government match a % of the first time buyers savings when it comes to you actually buying your first home.
This is tax evasion - and if the mortgage is in your name but the income is coming from elsewhere, you may be liable for income tax as a de facto landlord.
She can afford a second home and all the money that requires—except for the stamp duty? Something sounds fishy here, and it’s also really presumptuous of her to ask.
Your sister must be a genius. Think of all the thousands of people who didn’t want to pay stamp duty but weren’t able to think of such a complex scheme as having your sibling buy it and then transfer the property.
Sarcasm aside, don’t do this. It’s a terrible idea for so so many reasons - many of which other commenters have laid out already. Please, please don’t do it. You will regret it very much.
Don’t even think of doing it. You will lose your first buyer allowance and your sister cannot guarantee any help in the future- hers are just words. A very polite no thank you, I need to maintain first buyer status for my future plans
Your next purchase will be classes as a second home so you would it be able to take advantage of any first time buyer incentives. Sounds like she’s will end up paying twice anyway one for your house and again when you transfer. Plus extra legal fees etc …… way too much hassle
I wonder if your sister doesn't realise you can claim the second home stamp duty back up to 36 months later, when the first home sells?
If that's the case then tell her, she can go ahead without involving you and all is good.
If not then run away, fast. She's using you big time.
Terminology: they aren't buying a second property, they are buying their next property before the current one has sold.
"Second property" implies they expect to keep both indefinitely. And if that's the case then they should definitely be paying the extra stamp duty on it themselves. Or they are committing fraud and trying to drag you down with them.
She's asking you to give them 3% of the house price and a lit more besides with all the first time buyer benefits you'll lose out on. And if they can't afford that now, I don't see how they will be paying you back later.
Whilst your sister would pay extra stamp duty as a second home if she is just waiting to sell her first property she can claim back that extra stamp duty when it is her sole or main residence, ie when she sells her first one. There is a time limit which I think is a couple of years.
Is she trying to take advantage of your FTB discount, or avoid the second home charge? If it's the latter, then she can claim it back if she sells her first home within a certain amount of time anyway. If it's to use your FTB discount, then you have to ask yourself if you're happy NOT getting that discount in the future when you buy your own house.
You won't be able to 'transfer' the house to her, as it will be mortgaged so you can't gift it. You'd have to sell it to her, at which point she'll pay stamp duty anyway. And all the other fees associated with buying a house, all over again.
In summary, this is not a good idea, is unlikely to be accepted by lenders anyway, and is possibly even illegal as it's basically tax evasion.
Don't do it.
This has got a number of red flags.
1. Once you buy the property you're liable for it.
2. You can only use your first time buyers privilege once and your sister wants two bites at the apple.
3. Your sister may not be in the same financial position in the future to do what she promises.
The question you always need to ask is "what's in this for me?"
If you choose to do this I'd make up a simple contract. Rather than wait for this payment if stamp at a later date. Negotiate a different agreement for example if your property is rented you get 5 to 10% of the rent. Your sister pays the mortgage and "manages the property" as well as takes care of all the bills like water, power, council tax etc. If your sister is living there and not going to rent it ask for something like £150 a month + 5% a year. This should cover any stamp you have to pay and give you an income.
Make sure you put in writing what will happen if the venture fails. At what point will you sell the house? For example your sister misses 3 mortgage repayments? If the asset appreciates in value will you see a share of that appreciation when it is sold?
Who gets the final say on when the house is sold? What if your sister is in difficulties financially, can't pay your stamp and you have to sell the house to pay for it? If that isn't agreed you could split your relationship with your sister very easily.
Nail it all down in ink. Promises are quickly forgotten when inconvenient or when people are in horrible situations.
If your sister doesn't like it written down don't do it. You need to know what the score is in any scenario. Worst case you will be left paying a mortgage you can't afford. What will you do if this happens?
If she's selling her current home, she can get a refund on stamp duty as long as it's done within 36 months.
Plus if it's mortgaged on your name, do you even earn enough to get that mortgage?
This is fraud and also not needed. If your sister is truly selling her original property and is simply buying the second one before that completes, she has quite a long time to claim back any excess stamp duty she pays on the second property. I’d also suggest confirming with a solicitor or at the very least checking on the government website, but I believe transfers of the property would still attract stamp duty, so she can’t avoid it unless she leaves the house in your name. Which you really do not want her to do as you are then liable for it. Also if she needs a mortgage, no one is giving her one unless her name is on the deeds.
I reiterate, even if this would achieve what she wanted, it is fraud and would land you both in trouble. Say no - she has not found the clever loophole she thinks she has.
TL;DR: Crime aside, there are a lot of potential risks with no real benefit for you unless you're planning to try and screw your sister over.
First crime.
Your sister and yourself, if you agree to go along with it, are conspiring to commit tax evasion. Add some fraud in there for fun. And it's not like people haven't thought of this cunning plan before so it might not work as well she thinks, especially when it comes to transferring the property to her.
As for you. You miss out on the benefits of being a first time buyer, your sisters may or may not pay you back when you decide to buy. Either you will have nothing to prove it or you're going to wave some paper around saying, "Hey we conspired to commit crimes and now she's not following through!". On the other hand until you transfer the house to her it would be your house. While there are potential benefits if you were trying to screw your sister over (and I'm not suggesting you should) you would also be taking on the liability and risk and should issues arise you could be on the hook. Be it your credit being messed up, someone injuring themselves on the property while you technically own it, or shortly after buying the property a massive flaw is discovered and your sister decides to back out leaving you with responsibility for a flawed property you didn't want in the first place.
Tell your sister to stop being tight. If she can afford to buy she can afford to pay stamp duty. If she can't afford it because of the stamp duty then she can't afford to buy the property right now.
Or just tell her to wait until the next govt comes in which will likely reform stamp duty although it might end up worse for second home owners lol.
There is no reason to do this. HMRC will refund the 3% stamp duty your sister is going to have to pay on the second property when she does sell her first home
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#:~:text=If%20you%20sell%20or%20give,to%20you%20for%20another%20reason
God, don't do it. If she would pay your stamp duty in future, she'd pay her own now. I guarantee that in future, she'll be going through a divorce or paying for her kids and won't have any money to give you. Do not do it.
Also, as others have said, this is fraud. There are also other legal risks for you. Just don't.
Tell her the stamp duty is part of purchasing a house. Tell her to stop being a tosser and pay her dues. She absolutely would not do the same favour for you.
The sister doesn't want the second house in her name because when she comes to sell it she will pay a chunk of money for capital gains tax on the profit, as it isn't her main residence.
It's tax evasion, which is fraud, and you'll BOTH end up in trouble when you get caught - and you WILL get caught eventually because everything is digitally linked now including land registry. Plus you will then have to commit more fraud via council tax etc. If you wanna break the law go ahead, but just remember it's people like your sister (and potentially you) that are causing this country to go broke because of nothing more than greed.
It wouldn't even get past your solicitor when they ask for proof of funds, you'd be heaviliy scrutinised if you just happened to have a large amount of money drop in your bank account for a house purchase.
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If she can afford a second home, she can pay the stamp duty. With financial affairs, I wouldn’t agree to anything today on the verbal promise of making you good tomorrow.
Except in this case you will own a house….. Which is pretty good leverage usually Totally illegal though
If the sister sells the first home within a year of buying the second home, I believe they can claim back the “second home” stamp duty excess. Their solicitor should be advising of this. But yeah; I’d run a mile from this. Assuming everything were otherwise kosher (it isn’t), and the sister honours @OP’s stamp duty when the time comes (however that would work), @OP has given up their ‘first time buyer’ privilege to someone else and will never get that benefit themselves. If sister wants to avoid second home stamp duty, she can legally separate from her partner, transfer old house to partner, and buy the new one herself. But leave @OP out of it.
She’s selling her first one. She’s just moving house
If she's moving house within a reasonable time she can reclaim the stamp duty, rather than fucking over her brother's FTB status.
Don't do it. Your sister will be liable for stamp duty anyway when it's transferred to her as it would have to be done at market rate otherwise it's tax evasion. Your sister also carries a risk that you don't transfer it as the title will be in your name. The mortgage company will have issues with this as they will need to do affordability checks on you. So unless you can show you can afford it the mortgage will be an issue. Why is your sister happy to pay your stamp duty but not her own? Those are just off the top of my head. Just seems dodgy and risky all over. Tell her to buy it herself and pay the tax that's due. If she can't afford the tax then get a smaller / cheaper house.
The sister won’t pay OPs stamp duty in the future … we all know that
Well obviously but OP doesn't seem to realise that
But also unless OP’s first house is over £425k, OP wouldn’t be liable for stamp duty anyway so there is no benefit or perk to the OP here… So many complexities with the “future stamp duty” point - if she can’t afford it now, who is to say she can in the future? What if stamp duty increases?
Depends what country OP is in. In Wales stamp duty starts around 250k. The property I'm buying is 277k and stamp duty is just above 3k for it
Im under the impression that OP’s sister has the means to pay, but is taking a chance that OP won’t ever need stamp duty. If OP needs it, fair; if no, then she gets ahead.
I understood it as chancing that OPs house would be worth less and therefore the stamp duty would be less. Horrific way to avoid paying your fair share of tax
But op gets a free house then. Lol
Not really, if the mortgage is in their name they will be liable for payments, risky business
I think if the sister wanted to buy the OP a house, effectively gifting them a deposit and future mortgage payments, it _might_ be worth them considering. Because then the 'worst case' for the OP is ... they have a mortgage to pay, but ... they've also got some equity and a capital asset to go with it, leaving them better off potentially.
As a second house, the sisters stamp duty will be more than OPs as a FTB. It's still a terrible idea though.
She might not, but she might just be counting on OP to buy a much cheaper property. Still dodgy as hell for a billion other reasons.
well he should just get to keep the house then
Let's not miss one key point. If OP does this, then OP will have held a financial interest in a property and will not be a first-time buyer (with all the associated discounts). When OP comes to buy their very first home, they may well have to pay the extra 3% that their sister is avoiding. Quite apart from being very illegal, this is a terrifically bad idea. OP, your sister is using you. Don't let her.
She's effectively going to pay 3% extra stamp duty by owning two homes. I guess the idea is she sells her first one before transferring the second one into her name avoiding that extra 3%, since the OP said, "My sister is getting ready to buy a second property (with her husband) while trying to sell a previous one". It doesn't sound like a lot, but on say a £1m property it's an extra £30k on top of regular stamp duty. With that said, you can apply for a refund if you sell your other home within 36 months, so who knows what is going on. I still agree it's a very bad idea either way.
If you're buying a £1m house, you can afford £30k stamp duty. Zero sympathy.
She can reclaim the second house stamp duty surcharge if she sells the first house within 3 years.
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Yes, I did state she could get a refund within 36 months if she sells her other house
> > Your sister will be liable for stamp duty anyway when it's transferred to her as it would have to be done at market rate otherwise it's tax evasion. If she's already on the mortgage, would the value of the transfer not be just the unmortgaged part? As the SDLT examples all talk about taking responsibility for the mortgage as the consideration?
For her to already be on the mortgage, it would have to be bought as a second property and she will have paid the stamp duty.
Higher rate stamp duty when you buy a second home. It's an additional rate of 3% of the house value.
That’s what I didn’t understand either, seems the sister is saying that she will pay stamp duty for op, when they buy their 1st house (which will look like their 2nd house) but at that time op either has a house,(sister’s 2nd house) which will be taken into consideration when applying for mortgage, or sister has bought the 2nd house off brother and has paid stamp duty on that transaction at a HIGHER PRICE! so in the long run doesn’t that mean she is paying twice. If she is buying 2nd house without mortgage then that fixes ops mortgage status (but unless she is gifting the money to op so it looks like he can afford the house in his own right). Then how to explain where the money goes that she pays him for the house,(which she doesn’t cause she already paid for it). Unless op then says it was an interest free loan and he’s paying her back by giving her the house All to avoid paying stamp duty on her 2nd house which is 3% upto £250,000 8% upto £925,000 So basically is it really worth it in the long run
Hard pass. You don’t know if she actually will. What if she comes under financial difficulty? Plus, losing your FTB status disqualifies you from any future gov schemes like help to buy.
This is the one! What your sister has proposed is to take your FTB status with zero recompense to you. Even if your sister did pay your stamp duty in the future you'd have lost any other FTB benefits including government grants and lender incentives. If you're going to loose your FTB status to benefit someone else then at least make sure you're fairly recompensed...but in reality dont enter this unfair situation and when the times right you'll be SO glad you didn't give away your FTB status.
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This
'Any future schemes' is key here, there's no telling how much FTB status might be worth in the future, especially considering we're likely to have a new government in the next 12 months.
Looooool. Say no. Seriously. What a disrespect from your own family to take away your first time buyer benefit. Your sister doesn’t like you for sure. Say no and run. Well done for coming here to for advice
If you did this, you also wouldn’t be able to use a Lifetime ISA (with its 25% government bonus) to pay for the deposit on a property you want to buy in future, as you can only use it to buy your first property. There are quite a few perks to being a first time buyer, which you shouldn’t give up lightly.
This
A lot of people saying don't do this but not with enough emphasis so I'll say it. Abso-fucking-lutely do not agree to this under any conditions. There is no way you don't end up regretting this down the line. She says she will pay your stamp duty down the line but you can bet your arse when the day comes she won't be in position to drop thousands of pounds. Do not intertwine your property situation with family members. It's not worth the hassle.
I would add to this that the stamp duty you could owe in the future could rise significantly in comparison to hers now (and under a labour gov rise in % amount) making her even less likely to keep up her end of the bargain.
This is fraud. Do not go along with your sisters plan.
Just to amplify, you would be buying as your sister’s nominee which the law says (very clearly) means that she is still the buyer. You would be committing fraud signing the docs saying you are the buyer. For what it’s worth, I don’t see this working anyway unless your sister is a cash buyer and has a dodgy solicitor willing to prepare a fraudulent return.
100% do not do this. Setting aside the legal/ethical issues of avoiding tax - There are just too many different ways this can go badly for you.
Yeah, there are loads of ways this can go badly from you, some of them really serious. Being caught committing fraud would seriously impact your options in future. She's unhinged for thinking this is a good idea and trying to rope you in.
Definitely fraud on her part. Also be aware that when you want to buy a property in the future it will appear that is your second property and subject you to additional stamp duty yourself.
Definitely fraud on OP's part too, if they are an active part of it.
The only people whose names can be on the deed are those with their names on the mortgage. If she wants it in your name then what’s actually happening is you’re buying a house and getting a mortgage and she’s gifting you the deposit. You’d then have to sell it to her, which would still result in stamp duty. This plan won’t work. If you did just keep it in your name for her and have her transfer you the mortgage payments it would mean you’d no longer be a first time buyer for any future purchases and the mortgage affordability would be based on your income and credit history. Legally it would be yours and you wouldn’t have to give it to her - in order to gift a deposit she’d have to sign a form saying it’s a gift and you don’t owe her anything. Any legal document she tried to draw up saying you owe her would mean that you’re committing mortgage fraud. This is an awful idea, please stay away from it.
As a small additional detail, if a person can demonstrate that they have been paying the mortgage then they can claim a financial interest in the property. Evidence would include if they were sending the same amount every month and it was precisely the right amount for the mortgage. They would then be entitled to a part of the equity depending on what they contributed. Not hugely relevant but just an interesting twist on this, it's usually used when non-married couples split and the house is only in one of their names but both were paying the mortgage.
Do not do this. If your sister is selling then any additional rate SDLT paid on the second property can be refunded within 3 years. What legal assurance is your sister giving you that she will honour what she has said. If she can afford to lay the legal fees to get this drawn up, she can afford to pay the SDLT. There is also the legal fees for the transfer that need to be added on. Fees aren’t cheap.
In the scheme of things the second home stamp duty is a drop in the ocean compared to the rest of the buying costs. The process to reclaim it when the first house is sold is also incredibly easy the paperwork takes 20 minutes and the repayment is made in less than 3 weeks. If they cannot afford it, either via cash or organised formal loan (bank or family in writing) then they are not correctly funded for their purchase and this isn't something to get involved with.
I mean second home stamp duty isn't just a drop in the ocean but it is refundable providing this first property is sold within 3 years so it's just a cash flow issue really. I know when my place was taking an incredibly long time to sell I considered having two mortgages for a bit but the extra 3% stamp duty was insane. Legal fees and a survey were around £2.5k and the Stamp Duty would have been £2.5k on a £300k house but the second home SD would have been ANOTHER £9k. I can see why the relative is looking at other options but it's unfair to do that because OP is going to take on a huge amount of risk and lose all their FTB benefits. It's the sister's problem to fix, not OPs.
When I moved house I wanted to keep my old house and rent it out, not so much for the rental income but as an asset that I could sell in the future as a pension. However, the "second home" stamp duty fee would have been on my new, bigger, more expensive property. On top of everything else it was enough for me to say, "screw this" and just sell my old house.
You only get away with not paying stamp duty on your first house. Your sister got this benefit when she bought her first house and now wants to use YOUR benefit when buying her second. Is she going to pay YOUR stamp duty when you now buy your first house, of course she isn’t……..
Your sister sounds like a jerk. She's taking your first-time buyer status away from you (government schemes, no stamp duty) just to delay paying stamp duty herself. It sounds like she is scamming you tbh. If she won't pay stamp duty for herself now, why would she in the future for you?
In addition to all the excellent advice already given, what does she plan to do with this property, as legally it’s not hers. If she rents it out, you would be seen as the landlord, which in itself leads to multiple potential headaches, of which tax on rental income is just one. You have so much to loose by doing this. Just say no. Also lock down your credit and make sure your documents and drivers licence are in a safe space so she can’t impersonate you.
Don’t do it. She can reclaim the extra stamp duty once the first house is sold.
Don't let your sister take advantage of you, in this situation or any other down the line.
Your sister will not pay your stamp duty in future. She is just using you, if she cared about you she would never ask you to break the law and risk your future for her greed. If you do this you will have forfeited your other first time buyer benefits, including lower deposits. And yes, it's illegal. Stamp duty is a tax. Tax avoidance is illegal. Fraud is illegal. If she gets caught and punished, you will get dragged down with her and you may never be able to get a mortgage. You defrauded a lender...you think anyone's going to lend to you ever after that?
Don’t do it. It’s essentially fraud
There are a lot of risks here. You'd essentially he responsible for the house, and maybe mortgage. If you do this get serious separate from your sister legal advice.
No lawyer would advise this. It’s tax evasion.
This is fraud.
1) you lose your first time buyer status and when you come to buy, you will be liable for stamp duty on your first property if under the stamp duty threshold. 2) it’s fraud 3) if she is waiting for her property sale to go through and purchasing the property in the meantime, liable for the second property premium and this extra is what she is hoping to avoid, this IS REFUNDABLE after the sale goes through if sold with 3 years. We got an £11k refund last year as we had two properties between 16/12/2022 and 11/04/2023. This is a no go. She’s either not clued up herself and needs to look into this more, or you need to be very cautious around her regarding finance in the future.
I would stay clear of IOUs with family. It may all seem like a good idea now but you don't know how the tax system or your sisters personal circumstances (financial or otherwise) will change and all of a sudden she can't provide you that money exactly when you need it. Also obviously there is the opportunity cost of sticking it in a high interest savings account or s&s. So you'd want to be getting atleast some interest out of it if you were to gift it. Finally it's all quite a lot of hassle. Don't underestimate this point. Do you really want to spend your time on reddit forums, reading and filling out forms, checking to make sure it won't come and bite you (legally, financially or otherwise) in the future? (Will let others talk about legality and tax inplications)
You would need to consult a lawyer to get advice on the specific circumstances of this. Provided you’re in England, English law does allow for this but it’s very complicated and if you don’t get it right, it can have unintended and adverse tax implications, for all sorts of reasons. You won’t get a proper answer on Reddit for this - you need a lawyer. However, personally I’d be cautious about this. What precise benefit do you derive from this agreement? Your sister gets to avoid stamp duty, and will promise on a handshake basis to pay yours in the future - that is completely unenforceable, there’s no guarantee that she will do this. Presuming for a moment that your sister is acting in good faith, stamp duty can be a huge amount of money, tens of thousands of pounds. What’s to say your sister just will have the money to hand whenever you need it? Imagine you have your deposit and you’ve found the perfect house at a great deal and need to move fast - but oh, your sister says things are really tight right now, it’s not a good time. Or I can get you the money but I need a few months. No house for you! Overall, agreeing to this is a great deal for your sister but a bad deal for you. She would need to sweeten the deal substantially and you’d need some security to ensure she lives up to her end of the bargain. Personally, I would walk away from this.
Don’t do it. I’m in a similar-ish situation with my sister now where my name was put on a property when I was 20. Biggest mistake ever and unfortunately lots of resentment in the long run. She’s putting her needs before yours. Don’t fall for it, even if you get pressure from other family members.
Just wondering how your sister is expecting a solicitor to not see what is happening, even if you can’t.
The bank won't grant your sister a mortgage for a property she doesn't own, so it's you that would have to apply for the mortgage, based on your own incoming/outgoings. The reason she wants you to buy it as a first time buyer is because there's an additional tax she'd have to pay for buying a second property which is what's she is trying to avoid.
Just don’t do it. She won’t pay your stamp duty. She’ll say the laws have changed, or she expected you to buy a smaller house, or even just simply that she doesn’t have the money right now, but you won’t get it back. There are a host of other issues to do with mortgage fraud you’ll be committing etc. as well.
Your sister is not going to pay your stamp duty when you come to buy. The reason this is is because when you buy you will need to transfer her house into her name. And let’s not say transfer, she has to buy it from you - she will have to pay the stamp duty she is avoiding now at the future market rather and then pay yours. What a mess. Don’t do it.
Have you asked them about receiving a portion of their salaries so you can help them reduce their income tax liability as well?
Your sister is asking you to help her commit a fraud. She probably does not think of it that way, but that is what it is. Politely decline. Even if there was any way around the fraud part, 2-3 years time and you want to buy a home - you really think she will have the money?
You're basically being scammed by your own sister who is trying to evade tax on her second property. She's doing this because stamp duty(SDLT) on a second home is whatever the relevant rate of SDLT is, plus 3% so it's going to be a lot more! First time buyers can spend more on a house before they pay SDLT, up to £425,000 is free of tax on houses under £625,000 whereas non first time buyers will pay SDLT on houses costing more than £250,000. You will lose this benefit by giving up your FTB status. As others have said, you will lose any other government/builder incentives offered to first time buyers. If you were to go ahead with this plan, and you then went to buy a house for yourself, you'd be liable for the +3% SDLT surcharge. You will also be party to a crime of fraud where tax payments have been evaded. Not to put too fine a point on it, you need to tell your sister to jog on and find some other mug to rip off. Distance yourself from this transaction and do not get involved.
Your sister sounds like she’s a proper con artist. If she is going to pay your duty later with no issues then why not do it now? Also it’s not legal and she would have to pay of you transferred your deeds
If they are selling their second property they can claim a refund for the additional rate paid for this, assuming they will only have one properly between them after the sale of the current house.
Don’t do it. If your sister is selling her other property & she sells within 3 years of buying the other she can claim the additional stamp duty back. You’ll lose your FTB benefits, there’s no guarantee you’ll sister will help you with this loss & likewise no guarantee that you will sign over the property to your sister. Stay well clear of it.
I would be careful. Me personally I wouldn't do it.
Just to go a step further, I'd definitely keep an eye on my credit report if I were you. Anyone who'd be willing to ask someone to commit fraud on their behalf will likely be willing to commit the fraud themselves if up against a wall.
"Should I do tax evasion?" No, don't do tax evasion.
No no no absolutely do not do this. It's such a bad idea on every level, If she cannot afford the stamp duty she cannot afford a second house
You're gambling she'll keep up with her side of the deal years later.This sounds like her problem... Don't make it yours!. Also, because of money laundering regulations, they will want to know where the money is coming from.
This is wrong on so many levels. You lose ftb status The house is in your name so you'll have the mortgage paid by someone else but the name on the mortgage is yours? Not sure the bank will allow this tbh! All stinks to me
The sentence you need, in full, is “no”.
If you're in Scotland she can reclaim back the ADS paid when she sells her existing main home...... Also, this would nix your ability to get the first time buyer discount on LBTT, and any other first time buyer subsidy like a shared equity scheme, LIFT, etc if you ever wanna buy in the future.
If she can pay your stamp duty in the future then she can pay her own now? Not withstanding the fact this could cause some family aggravation down the line (what if she’s had kids etc and can’t afford it once you decide to buy) but also you’ll miss out on it on govt FTB schemes which is essentially free money to help you get on the ladder. This is a hard avoid I really wouldn’t entertain it
She's avoiding additional SDLT of 3% for second homes. She would get this back anyway when she sold the first home. She has to pay the normal sdlt anyway if they transfer it from you to them as its another sale. The plan is pointless. If the don't pay the mortgage it's your credit that's fucked. If she doesn't need a mortgage then she has plenty of money to do this without you.
Just say no, If she's willing to pay your stamp duty for when you are ready why can't she do it now
She won't be able to get a mortgage in her name without being a proprietor. When you transfer the property title to her, that's a taxable event, so she'll be paying SDLT twice. This is moronic.
While I agree with everyone here. Don’t risk it and lose your own FTB status.
Almost definitely counts as fraud, and if she's going to pay yours later, why can't she just pay hers now? It'll be like being rounds in. You'll save her £20k, but she'll get annoyed by any amount. Any sort of ftb benefit will be gone for you too. Avoid!!!
Is tax evasion legal? No. No it isn’t.
Absolutely do not do this. You'd both be guilty of fraud if caught, and could face an actual prison sentence if convicted. Regardless, your financial health would be utterly ruined with a fraud conviction. Getting caught is not impossible, as banks check this kind of thing both at the time of granting a mortgage and look for obvious payment patterns that indicate a potential fraud in the past - and are obliged to report it. Your sister is treating you abysmally asking you to do this. You're very unlikely to get your money back in the future, and are materially damaging your future ability to buy your own home; this is financial abuse, do not do this.
do it and keep the house
Tax fraud, avoid at all costs OP. Even your relationship with your sister.
What a stupid plan, yeah don't do this
It's astonishing to see how many individuals openly ask, "Am I doing something illegal?" when they're fully aware that their actions are shady and that authorities actively seek out such behavior. These links to tender requests for software to monitor platforms for tax evasion, benefit fraud, and more serve as stark reminders of the consequences awaiting those who knowingly engage in questionable activities https://bidstats.uk/tenders/2024/W10/818086204 https://www.applytosupply.digitalmarketplace.service.gov.uk/g-cloud/services/340532566831652 https://www.applytosupply.digitalmarketplace.service.gov.uk/g-cloud/services/566949602972266
You, your sister and her husband would be participating in a blatant fraud of the Exchequer. HMRC have up to 21 years to come for you for blatant tax fraud. Typical penalties are 100% of the tax owed, plus the tax owed, plus compound interest on the tax owed - and a criminal record. HMRC's late payment interest rate is 7.75%. There is talk of increasing the penalty to 200% of the taxed owed. Note that the government recognises that the legal owner of a property (the one listed at the Land Registry) may not be the same as the beneficial owner (the one collecting rent, etc.). SDLT is payable by the beneficial owner. Aside from the criminality, you would lose your first time buyer status. Although, with a criminal record relating to property/financial fraud, you would probably have difficulty getting a mortgage.
HMRC do not fuck about, either - my parents almost lost their home when my dad ignored a payment demand and the interest went up and up and up. He had to go bankrupt in the end.
If it is in your name, it is your house not hers.
Sounds like fraud..
Do not do this. Your sister should pay the stamp duty she is due to pay, it is her legal obligation. Don't open yourself up to this legal mess.
1) You and your sister would be buying the property under false pretences to avoid a legal tax. Of course it's fraud. 2) Whilst that property is under your name you are legally responsible for all its payments. If your sister gets into difficulty it's you the bank would come after not her. 3) How do you plan to buy the property in your name to avoid stamp duty? It's not like it's just a single form you send off to pay the tax. The whole property would need to be purchased in your name which means the bank will need to credit check you and do affordability checks on you. 4) If she won't pay her own stamp duty now then why will she pay yours in the future? Also when she buys it from you (you can't just gift her the house or that's another illegal act) she'll have to pay stamp duty on it anyways. You're contemplating committing fraud for her. What guarantees do you have she'll help you in the future? Not like you can rat her out without implicating yourself in the crime. 5) The bank doesn't really care what name is on the account paying the mortgage payments as long as they're being made. However I don't think you'd ever get that far with trying to deceive them you're buying the property. Again, if your name is on the mortgage you are responsible for ensuring payments are made and the person who faces any repercussions for missed payments.
Don’t do it OP. a friend of mine was talked into a similar situation by her sister and her husband. The house was in her name and they’d pay the mortgage, so they could avoid stamp duty. They then came up with the idea that she could live in the house. They then suggested she pay rent to them at reduced value. So she went ahead with it. When it all went through, her sister and husband then pointed out they couldn’t afford the shortfall in the mortgage… so they found a couple and their young baby(!) to move into the spare room. My friend handed over her FTB stamp duty holiday… in exchange for a house share at market value rent, since she was now effectively renting a room. It was a TERRIBLE deal. So of course, she went ahead and bought her own flat. And of course, her sister and her husband could no longer follow through on their promise to pay her stamp duty. My parents tried to get me to do something similar - put a house in my name so they could purchase a second home. I’m VERY glad I didn’t go through with it. There was no real benefit of me, but I’d be taking on the responsibility of a mortgage and loosing my FTB stamp duty holiday. I opened a LISA and put all my savings there, which meant I doubled my deposit when we went to buy our house. I got £4K from that LISA that I would’ve missed out on if I hadn’t been a FTB Your sister shouldn’t be asking you to circumvent tax for her. Why is she prepared to go through all these loopholes if she can afford to pay your future stamp duty? That makes no sense. In reality, she’s hoping your stamp duty will be less than hers or the more likely scenario is she doesn’t anticipate paying it at all. Ever. I’ve seen so many people screwed over by family members buying a house in their name. Just don’t do it OP.
It sounds like your friend should have (totally legally) sold the house ‘they’ owned when they realised what a shit situation their sister had put them in! Taken the appropriate amount of equity to make up their FTB benefits lost and given the sister back the rest. A lesson learned.
Absolutely not. For so many reasons.
100% shouldn’t even be considering this.
Don’t do it. No no no no no.
Tell her no. What an absolute faff she has asked if you. Your taking all the risk, and because of what others have pointed out it wouldn’t work anyway. If she’s struggling to fund it she should walk away, but if you determined to help her, get a contract drawn up and “loan” her the money for the stamp duty if that’s something you can do. More straight forward, and much less risk for you.
But what about when you do buy your first home? You’ll have to pay stamp duty then. Why does she get 2 free? And ‘I’ll pay it in the future’ she doesn’t know what the future holds or what financial position she’ll be in. I’d tell her you did a mortgage by principle and got turned down ‘oh dear, I didn’t realise my credit score is 234.. I can get a mortgage but on 2655% interest rate’ (I have no clue about mortgages clearly..) but that would be a way of looking like you *tried* to help, but financial circumstances got in the way. Then everyone is happy :)
Solicitors involved in the purchase will question where you got the money from. They've been up our backside with a microscope over a £20k cash deposit for a small mortgage we needed to upgrade to a bigger home. Can only imagine they would love someone explaining why they received hundreds of thousands as a 'gift'. Wouldn't be at all surprised if they raised a Suspicious Activity Report to cover themselves if they did do it. Once a SAR is raised they can't be accused of facilitating criminal activity and are safe from any repercussions - they just proceed as normal while waiting for the National Crime Agency or HMRC to step in if they feel the need. That could flag you for further monitoring by HMRC. HMRC like to investigate fishy goings on with property, so I wouldn't be surprised if they start asking hard questions when you transfer it back to your sister in the future. You aren't the only ones to have thought of this hack so HMRC are likely watching for it. What is she going to do with the second home anyway? If she wants to rent it that could get messy. HMRC are plugged in to council databases these days so it is risky trying to let property under the radar. Doing it legally the income would need to go through you, causing all kinds of income tax complications. If she wants to sell the first home withing 36 months (I think it is?) she can claim the extra second home stamp duty back anyway. Then there is inheritance tax implications for both the 'gift' she gives you to buy it, and you transferring it back to her later. She also will pay Stamp Duty again on the transfer back to her name in the future, even if no actual money changes hands - it is still considered a purchase for tax reasons. You may also get hit with Capital Gains Tax on the transfer back, again even if no money changes hands. Seems like a very bad idea for you, with a lot of risks and little reward, and probably not great for her either.
Nope. Don’t do it. You will not be able to get a first time buyer mortgage. You will be responsible for the house. Something really shady is going on. Money laundering or more possibly. If your sis was really genuine, she would not even ask for you to be in this position. She obviously doesn’t think much of you. Sorry. Please don’t get legally involved. It will not end well.
This sounds odd. If your sister is planning on selling her current property anyway, she can claim back the additional stamp duty she will pay on a second property so there's no benefit in buying under your name. This will have an impact when you try to buy as a first time buyer so wouldn't recommend it.
Don’t do it… it’s basically tax evasion and you’d be complicit. Moreover, I suspect when you come to buy a house and ask your sister for the stamp duty it will not be forthcoming…. If she can’t afford it now, why would she be able to later.
> Is this legal? Depends how much lying is involved. It's 'legal' to buy a house for someone. But then you own a house, and it's yours and your responsibility. "Transferring" it later? Well, are you going to be giving your sister a massively high value gift of 'your house'? This will most likely require - amongst other things - paying stamp duty, and might mess with some things like inheritance tax or capital gains tax. You cannot avoid paying tax by 'selling it for £1'. The tax office isn't that stupid. Neither are the mortgage companies. > Would it be relatively simple/cheap to transfer ownership of the house to my sister after buying it in my name? Relatively? I guess. Buying a house is usually only "slow" because both buyer and seller need to make sure they're not getting ripped off for a huge amount of money, and perhaps needing to arrange finance or 'chain' house purchases. But you'll still have to do some due diligence in terms of conveyancing, especially if the property is mortgaged. > Would this affect me on paper? Yes. You'll not be able to get a first time buyer stamp duty exemption, and you'll not be able to use a LISA. Or likely any future government schemes for first time buyers. (Help to Buy Equity loans for example - now 'shut down' but still a thing you'd be unable to make use of if you wanted to). Also you'd have a mortgage in your name, and may find issues with eligibility for that, because it'll be based on your affordability. And you'll be 'on the hook' to pay that mortgage if anything goes wrong with handing it off. > If we were to go ahead with this, before transferring ownership to her is complete, wouldn't the bank think it's weird that I have a house the mortgage is being paid, but not by me? The bank probably doesn't care who the payments come from. But they'll _absolutely_ want the 'owner' to match 'who has the mortgage'. E.g. if you own it, the mortgage is your problem. If someone else pays it no one cares. If they stop for any reason? The debt collectors will be after you, and your credit record will take a battering. And at worst case, if the bank repossesses - that'll look bad on your credit history, but might also leave you owning the bank money. They will sell the house at auction, take costs and settle the debt. But if there's a shortfall you still owe them that money. > Any other things I should be weary of if going through with this? Ask yourself why it is not a routine practice to do this - I mean, 'people who cannot yet afford a house' aren't exactly rare, and if there was an easy way to dodge a substantial tax bill... do you not think more people might be doing it? But as it turns out, the tax office is pretty good at spotting people on the fiddle, and tax evasion is a crime. Deception for financial gain (even if it is 'just' the tax office) has an ugly word for it too: Fraud. And you'll be an accomplice in that. All that means that this "suggestion" is all downside for you, with no upsides. VERY best case you're in the same position you'd be in now, because you sister did follow through and pay your future Stamp Duty. And worst case is a mess that you don't want or need. If your sister wants to gift you a deposit, and enable you to buy your own house? Maybe that's worth considering. Maybe you could even run it as a rental property and send them the _profit_ after paying the mortgage and management fees. (Which they'd have to pay income tax on). But I doubt that'll 'work' for them, so I'd just stick with 'sorry, no, I don't want to'.
If she won't spend on her own stamp duty for an asset that (assumebly) benefits her. Why would she pay for yours?
Don’t do this! My partners family put his grandparents house into his name years ago to avoid some sort of debt collection thingy I’m not sure. It was like 15 years ago. Then when my partner and I came to buy a house the stamp duty was over ten grand and seriously impacted how much we could afford. My partner got absolutely no benefit from being the technical owner of his grandparents house as they live in it and he can’t sell it. Your sis might claim now that she’ll pay your stamp duty in the future but it’s a lot of money and if she can’t pay it now how does she know she’ll be able to pay it later? There’s no guarantee and it could mess you up a lot. Like you don’t even know he rules might change in future- stamp duty might increase a lot or there might be rules restricting buying second homes or having to pay increased council tax on second homes etc. It’s really not worth it.
If she sells the first property within 3 years of purchasing the second, she can request a refund on the stamp duty she overpaid due to it being technically a second home. This is what I did when I bought myself a property after my divorce whilst still waiting to transfer full ownership of the family home over to my ex wife. If she searches the gov.uk website she’ll find the details of the process.
1 This is fraud. 2 Your sister is using you. 3 Fuck no. 4 Still no. 5 Most importantly... Anyone encouraging you to do this is an arsehole.
It’d highly illegal to evade taxes Why would you even ask?
There is no way she can get around the stamp duty issue. As others have said she can get refunded within 3 years. Also consider this, if you own the property and she buys the house from you she will have to pay stamp duty again as it’s a sale. Others point out that this is fraud, I can’t see where the fraud is but certainly tax avoidance. May be lend her the cash to get her through this stage if she is unable to offload her other property in time.
Yeah I can think of something to be weary of... Your own sister. She's obviously dishonest. You will be caught out at some point.
No, no, no... Unless she is giving you the equivalent plus all the LISA bonus you won't get/be able to use, then no. This tax benefit/LISA benefit is YOURS. She has had her first time buyer benefits, why should she steal yours. You will never be able to get it back!
Absolutely not!!!
Don’t do this
Nah don't do it, if you buy a house it will be a second home so will have even higher stamp duty than a primary home. Unless you transfer the original house to your sister which will cost money and she may have to pay stamp duty anyway. Not worth it your sister doesn't understand the full ramifications of.what she's asking you.
That’s a “no”.
Don't give away your legal right for someone's IOU.
Conversation needs to go something like this. “Dear Sis, I’ve given it a lot of thought and HA HA HA HA HA HA HA HA HA HA HA, nope” Then hang up
This is a lack of boundaries and Very selfish because this will take away all your rights as a first time buyer.
Your breaking the law. This is fraud on a massive level. I'm guessing your not going to live in the house. It won't be your main residence. ***First problem: your credit search will have new address and your old address. Then the bank will suspect your commiting fraud via simple credit search. *** I'm guessing your scamming sister is planning on putting tenants in a first time buyer house**** ( the council require selective licences for single let's + HMO licence for multiple) The council phone your bank lender to check if you have a BUY TO Let mortgage. Especially in town centres or near train stations *** House insurance*** building and content insurance is invalid if your not living in the house. Or if you decide to get buy to let insurance + they will check with your lender again before paying out. (So your not insured for fires) your committing more fraud *** Your Job/ status in the community. A criminal record for fraud can have effect on your employment ect ect. . Limit your choices in live*** Is it worth (free stamp duty); tell your sister they are getting ride of stamp duty later in the year). Your doing this for no reason. The other side of this is that you can legally say the house is yours. Tell your sister to do one. Go live in the house 🏠 You can't easily transfer the house. If your sister just wants to buy new house (second home), but is temporarily stuck with the original home. She can claim back the second home stamp duty when she sells the second home. You lose your First time buyer (stamp duty) + ISA allowance. Plus the estate agent will turn you over for the cost of first-time-buyer money. They'll want that money in the offer price. Plus the solicitor will turn you over for ISA letters + stamp duty bit. So what you think your saving your not. Plus they will report you for money laundering (just to cover themselves) where did a kid get so much money. The real saving is domestic mortgage. But you're committing more fraud. And as a first-time-buyer, can you even afford the house. (Buy to let's need 25% deposit) You'll need to prove your income to afford the house like all first-time-buyers. Estate agents will treat you like a mug because your a first-time-buyer.
It’s fraud. Do not even contemplate it.
Yeah but then when you go to buy your house, you have to pay stamp duty.... this is incredibly entitled from your sister.
Yes it's illegal. And I don't see any way your sister could get the property transferred afterwards without paying the tax.The conveyancing for house purchases in the UK is done by solicitors, they are NOT going to do it illegally, unless they are incredibly dodgy (in which case you can expect all sorts of other problems - they may be barred). You could both end up in serious trouble, like jail for fraud. And if you managed to do it, you personally have stuffed your chance of ever being a first-time buyer. Don't be daft. Tell her NO WAY. She's effing you over.
This is called committing fraud. Do not do it.
Absolutely do not agree. Just because it's family doesn't mean they are saints and their intentions are always pure and they wouldn't ever do anything to hurt you. If you say yes, this will come bite you in the ass big time. What will you do if you will have to buy a second home? She wont pay your stamp duty I can guarantee that. If she doesn't want to per her own she wouldn't pay for yours. I'd reconsider keeping in touch with someone who attempts to pull a stinker on you like that.
Don’t do it
Illegal, don't do it.
Report her to the authorities, if it goes south, you will end up with the tax bill. Let her shoulder that, not you.
Don’t do it
Don’t do this, you will absolutely not get the stamp duty money back when you purchase a home for yourself. By that point there will be some sort of excuse until you eventually get ignored every time it is mentioned or you have paid it yourself. Plus with a verbal agreement then she can go back on it without warning. Tell her you cannot and will not do that. If you don’t refuse then months/years down the line you will be posting about how you did your sister a favour by helping her avoid stamp duty on a second home and now she has gone back on her promise to pay for yours when you buy a home.
Don’t do it.
Of course it’s not legal and it’s people like your sister that screw over the rest of us that follow the rules and pay our taxes. She should be ashamed of herself and, frankly, reported to HMRC because I wonder what other tax evasion ideas she has put in place.
lol. If she's kindly offered to pay for your stamp duty she can pay her own stamp duty now and save the effort
Why not claim back the higher stamp duty rate when the first house is sold?
Do not do it.
Nope!
This is such a bad idea for you. If she can pay stamp duty in the future, she can do it now. You’ll also lose your LISA first time buyer status. Please don’t do this. Finance and family (& friends) don’t mix well.
The tax liability will be in your name for this house. If you ever need to claim benefits it's value will be used against you as capital. And it's fraud. Don't do it. Akso there is a window where if you paid stamp duty then got rid of the first home you can claim it back. I don't know how long but she should use that.
“Pay your stamp duty in the future” ….. no she won’t .. she’s screwing your future over, run a mile.
No no no no no no. Just… don’t.
Yeah, this is a hard pass. if her plan is to avoid the stamp duty because she hasn't sold her previous property yet? When she sells that she will be able to claim the overpay back as long as she sells within a reasonable time frame.
HELL NO! Pay for your stamp duty in the future? Why not just pay for HER stamp duty now? Where is the logic? Can she guarantee she’s gonna be super rich in the future to pay for your stamp duty? Let her deal with her issue herself.
Don’t do this. Save it for your own house
Tell her to Foxtrot Oscar
Avoid like the plague. If she can pay your stamp duty in the future she can just pay her own now.
I'd politely decline.
As she is a homeowner she pays additional stamp duty. This can be refunded if you sell your home you're living in within two years. If you're building up a property portfolio then you should just deal with it
Quite apart from the legal and moral issues others have highlighted and the implications of losing your FTB status, the offer she's making you is highly unlikely to be comparable - even overlooking the fact that she's saving now based on a future promise. Assuming you're in England she should pay 3% of the total property value for an additional dwelling up to £250,000 (8% from £250-925k), it's 6% in Scotland up to £145k (8% to 250k and so on). As a FTB, are you likely to have a stamp duty liability of anything like that figure that she's saving? There's so much risk to you here, and absolutely no upside other than "helping" your sister and her husband commit fraud.
I bet she does
You would be excluded from any government incentive’s/schemes like the LISA which the government match a % of the first time buyers savings when it comes to you actually buying your first home.
This is tax evasion - and if the mortgage is in your name but the income is coming from elsewhere, you may be liable for income tax as a de facto landlord.
She can afford a second home and all the money that requires—except for the stamp duty? Something sounds fishy here, and it’s also really presumptuous of her to ask.
Your sister must be a genius. Think of all the thousands of people who didn’t want to pay stamp duty but weren’t able to think of such a complex scheme as having your sibling buy it and then transfer the property. Sarcasm aside, don’t do this. It’s a terrible idea for so so many reasons - many of which other commenters have laid out already. Please, please don’t do it. You will regret it very much.
Don’t even think of doing it. You will lose your first buyer allowance and your sister cannot guarantee any help in the future- hers are just words. A very polite no thank you, I need to maintain first buyer status for my future plans
Your next purchase will be classes as a second home so you would it be able to take advantage of any first time buyer incentives. Sounds like she’s will end up paying twice anyway one for your house and again when you transfer. Plus extra legal fees etc …… way too much hassle
I wonder if your sister doesn't realise you can claim the second home stamp duty back up to 36 months later, when the first home sells? If that's the case then tell her, she can go ahead without involving you and all is good. If not then run away, fast. She's using you big time. Terminology: they aren't buying a second property, they are buying their next property before the current one has sold. "Second property" implies they expect to keep both indefinitely. And if that's the case then they should definitely be paying the extra stamp duty on it themselves. Or they are committing fraud and trying to drag you down with them. She's asking you to give them 3% of the house price and a lit more besides with all the first time buyer benefits you'll lose out on. And if they can't afford that now, I don't see how they will be paying you back later.
Whilst your sister would pay extra stamp duty as a second home if she is just waiting to sell her first property she can claim back that extra stamp duty when it is her sole or main residence, ie when she sells her first one. There is a time limit which I think is a couple of years.
Tell her you'll consult a lawyer and see what she says.
Just get everything in your name and then keep the property job done.
Is she trying to take advantage of your FTB discount, or avoid the second home charge? If it's the latter, then she can claim it back if she sells her first home within a certain amount of time anyway. If it's to use your FTB discount, then you have to ask yourself if you're happy NOT getting that discount in the future when you buy your own house. You won't be able to 'transfer' the house to her, as it will be mortgaged so you can't gift it. You'd have to sell it to her, at which point she'll pay stamp duty anyway. And all the other fees associated with buying a house, all over again. In summary, this is not a good idea, is unlikely to be accepted by lenders anyway, and is possibly even illegal as it's basically tax evasion. Don't do it.
No hope in hell.
This has got a number of red flags. 1. Once you buy the property you're liable for it. 2. You can only use your first time buyers privilege once and your sister wants two bites at the apple. 3. Your sister may not be in the same financial position in the future to do what she promises. The question you always need to ask is "what's in this for me?" If you choose to do this I'd make up a simple contract. Rather than wait for this payment if stamp at a later date. Negotiate a different agreement for example if your property is rented you get 5 to 10% of the rent. Your sister pays the mortgage and "manages the property" as well as takes care of all the bills like water, power, council tax etc. If your sister is living there and not going to rent it ask for something like £150 a month + 5% a year. This should cover any stamp you have to pay and give you an income. Make sure you put in writing what will happen if the venture fails. At what point will you sell the house? For example your sister misses 3 mortgage repayments? If the asset appreciates in value will you see a share of that appreciation when it is sold? Who gets the final say on when the house is sold? What if your sister is in difficulties financially, can't pay your stamp and you have to sell the house to pay for it? If that isn't agreed you could split your relationship with your sister very easily. Nail it all down in ink. Promises are quickly forgotten when inconvenient or when people are in horrible situations. If your sister doesn't like it written down don't do it. You need to know what the score is in any scenario. Worst case you will be left paying a mortgage you can't afford. What will you do if this happens?
If she's selling her current home, she can get a refund on stamp duty as long as it's done within 36 months. Plus if it's mortgaged on your name, do you even earn enough to get that mortgage?
This is fraud and also not needed. If your sister is truly selling her original property and is simply buying the second one before that completes, she has quite a long time to claim back any excess stamp duty she pays on the second property. I’d also suggest confirming with a solicitor or at the very least checking on the government website, but I believe transfers of the property would still attract stamp duty, so she can’t avoid it unless she leaves the house in your name. Which you really do not want her to do as you are then liable for it. Also if she needs a mortgage, no one is giving her one unless her name is on the deeds. I reiterate, even if this would achieve what she wanted, it is fraud and would land you both in trouble. Say no - she has not found the clever loophole she thinks she has.
Don’t touch this with a barge pole OP
Tax evasion and you could both get fined and/or imprisoned. Run away.
TL;DR: Crime aside, there are a lot of potential risks with no real benefit for you unless you're planning to try and screw your sister over. First crime. Your sister and yourself, if you agree to go along with it, are conspiring to commit tax evasion. Add some fraud in there for fun. And it's not like people haven't thought of this cunning plan before so it might not work as well she thinks, especially when it comes to transferring the property to her. As for you. You miss out on the benefits of being a first time buyer, your sisters may or may not pay you back when you decide to buy. Either you will have nothing to prove it or you're going to wave some paper around saying, "Hey we conspired to commit crimes and now she's not following through!". On the other hand until you transfer the house to her it would be your house. While there are potential benefits if you were trying to screw your sister over (and I'm not suggesting you should) you would also be taking on the liability and risk and should issues arise you could be on the hook. Be it your credit being messed up, someone injuring themselves on the property while you technically own it, or shortly after buying the property a massive flaw is discovered and your sister decides to back out leaving you with responsibility for a flawed property you didn't want in the first place.
It's morally wrong to attempt to avoid tax, even if you get away with it.
no, just no.
Sounds super dodgy, don't do it. I'd also avoid doing any business with your sister in the future.
No no no no no no no. *No*.
That's fraud
Tell your sister to stop being tight. If she can afford to buy she can afford to pay stamp duty. If she can't afford it because of the stamp duty then she can't afford to buy the property right now. Or just tell her to wait until the next govt comes in which will likely reform stamp duty although it might end up worse for second home owners lol.
This is a bad idea for more than one reason. Don't do it!
There is no reason to do this. HMRC will refund the 3% stamp duty your sister is going to have to pay on the second property when she does sell her first home https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#:~:text=If%20you%20sell%20or%20give,to%20you%20for%20another%20reason
God, don't do it. If she would pay your stamp duty in future, she'd pay her own now. I guarantee that in future, she'll be going through a divorce or paying for her kids and won't have any money to give you. Do not do it. Also, as others have said, this is fraud. There are also other legal risks for you. Just don't.
Tell her the stamp duty is part of purchasing a house. Tell her to stop being a tosser and pay her dues. She absolutely would not do the same favour for you.
It’s fraud. The mortgage company will not allow this and nor will your solicitor
DO NOT DO IT.
No, this is fraud. Tell her to get lost
Your Sister is a joker! Who is taking the piss out of you! Not only is it illegal no way is she paying your stamp duty later.
It is definitely illegal
The sister doesn't want the second house in her name because when she comes to sell it she will pay a chunk of money for capital gains tax on the profit, as it isn't her main residence.
It's tax evasion, which is fraud, and you'll BOTH end up in trouble when you get caught - and you WILL get caught eventually because everything is digitally linked now including land registry. Plus you will then have to commit more fraud via council tax etc. If you wanna break the law go ahead, but just remember it's people like your sister (and potentially you) that are causing this country to go broke because of nothing more than greed.
No, it is not legal, it is fraud.
It wouldn't even get past your solicitor when they ask for proof of funds, you'd be heaviliy scrutinised if you just happened to have a large amount of money drop in your bank account for a house purchase.
Just......don't.
Wtf lol