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Stamp duty on separation

Is a formal deed of separation required before

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Married couple separating, and selling the family home and buying one each. On Googling, I find the words "Spouses are treated as living together unless separated under a court order or formal deed of separation." This should happen in the next few weeks. Nothing has been done about a formal deed - is this immediately required? Is there any danger of the higher rate of stamp duty being due on the new properties?

Also there is a rental property which is on the market, but has not been sold yet. Given this has never been a PPR, is this an exposure? I think I may have heard mention at a tax update seminar, but cannot remember clearly.

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By NicoleM
29th Nov 2020 21:56

When you purchase another property, if you haven't sold your marital home, you would pay stamp duty at the higher rate (2nd home),but you have a period of 12 months, I believe, to claim part of the additional stamp duty back when you sell your primary home.

A formal deed of separation, has to be approved by the court, which takes around 6 weeks from the date you submit the form. However, on the form, you put the date which you separated / moved out.

Generally, you would not be recommended to do this until your finances have been agreed - which is probably not possible until after you have sold the rental property, as this would effect the amount of equity to be divided between the two parties.

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By Justin Bryant
30th Nov 2020 10:43

To avoid the 3% he/she has to either both get rid of the BTL and be within the exemption below or sell the previous main home within the usual time limits/conditions (and if necessary obtain a refund).

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdlt...

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