Stamp Duty on Freehold House subject to long leases; merge title?

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    Stamp Duty on Freehold House subject to long leases; merge title?

    Am interested in buying freehold house which is divided into 2 flats, both let out on AST. G
    round floor flat is held under the terms of a Lease dated the 11 November 1987 granted for the term of 999 years from the 1st February 1987 and the first floor flat is held under the terms of a Lease dated the 14th May 1988 granted for the term of 999 years from the 1st February 1987. Two years ago the seller bought the freehold title but said there were issues around stamp duty when he bought. I think his wife already owned one of the flats. He will not go into details but said he was able to reclaim back additional tax paid from HMRC. I can only assume he had to pay SDLT on leasehold interests as well as the freehold which he bought for £2,000.00.
    I realise that the leasehold interests can be merged into freehold title as they are in same ownership. I only want to use the property as long term investment property to generate income.

    1
    Does anyone know the SDLT position if I buy the freehold for £190,000.00? Do I have to pay stamp duty on existing leases too?

    2
    What are land registry fees payable if I merge leasehold titles or I can ask current seller to do this before I buy?

    3
    Is it advisable to retain leases in case I want to sell off the individual flats in the future?

    Any advice would be appreciated





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    #2
    Flats must remain under leasehold title or the next buyer will have difficulty finding a mortgage.

    sdlt is payable on residential property transfers for £190k property , it is 2% on the amount above £125K. i.e 2% of £65K.= £1300.

    If you already have a property registered in your name, then extra 3% will be added = 3% of £190K = £5,700 total = £7000.

    The 3% extra charge is added if the sale price is £40K or over.

    Comment


      #3
      1. And seller will have to pay CGT on £198,000 - I doubt he'll like that.

      Comment

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