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Employer supplied accomm and PPR and BTL

Shropshiretom
Posts: 8
Joined: Sun Dec 11, 2016 9:57 pm

Employer supplied accomm and PPR and BTL

Postby Shropshiretom » Tue Apr 18, 2017 10:58 pm

Husband and wife reside in accommodation supplied by their employer.

They jointly own a property which they have nominated as their PPR since 2010(Property 1) which is tenanted. The wife also owns a property solely in her name - with no mortgage - which is tenanted.(Property 2).

The husband and wife wish to retire in 2018 and have placed an offer on a house in their local village to which they will retire and which will be their main residence (PPR).(Property 3).

The wife has placed her solely owned property (Property 2) on the market to help fund the purchase of their retirement house.(Property 3).

The husband and wife do not intend to sell Property 1 but keep it as a buy-to-let. They will file a PPR nomination stating that Property 3 is now going to be their main residence.

Will they have to pay the increased SDLT of 1% + 3%on the purchase of Property 3?

What if they rent out Property 3 between the purchase date of June 2017 and the date they take occupation, May 2018.

Any help would be greatfully appreciated.

someone
Posts: 126
Joined: Mon Feb 13, 2017 10:09 am

Re: Employer supplied accomm and PPR and BTL

Postby someone » Wed Apr 19, 2017 1:02 pm

In my view, yes they will have to pay the additional SDLT.

Shropshiretom
Posts: 8
Joined: Sun Dec 11, 2016 9:57 pm

Re: Employer supplied accomm and PPR and BTL

Postby Shropshiretom » Thu Apr 20, 2017 8:14 am

Thank you 'someone'. Do you think we could look for a refund once we had moved in - provided it is within 18months of purchase?

maths
Posts: 6743
Joined: Wed Aug 06, 2008 3:25 pm

Re: Employer supplied accomm and PPR and BTL

Postby maths » Thu Apr 20, 2017 1:21 pm

Presumably the job related accommodation is occupied under licence or a short lease ie the occupiers do not possess a major interest in that property for SDLT purposes.

Irrespective of any election re a main residence such election is only relevant for CGT, not SDLT, purposes.

On the purchase of P3 (the intended main residence) P2 will have been sold but ownership of P1 will remain. Thus, P3 will not have replaced an earlier main/sole residence and hence the 3% charge will apply on P3's purchase.

If both P1 and P2 are sold prior to the acquisition of P3 then the 3% charge is not automatically avoided. Prima facie, it would not seem to be the case in such circumstances that P1 was de facto a residence within 3 years of the acquisition of P3 (a condition of replacement of a residence).

Similarly, there appears to be no grounds for any reclaim of any 3% charge imposed on purchase.

Shropshiretom
Posts: 8
Joined: Sun Dec 11, 2016 9:57 pm

Re: Employer supplied accomm and PPR and BTL

Postby Shropshiretom » Mon Apr 24, 2017 12:40 pm

Thank you Maths for your answer. Guess I'll have to pay the 3%.

SDLT Geek
Posts: 25
Joined: Sun Apr 30, 2017 5:45 pm

Re: Employer supplied accomm and PPR and BTL

Postby SDLT Geek » Sun Apr 30, 2017 6:10 pm

maths wrote: If both P1 and P2 are sold prior to the acquisition of P3 then the 3% charge is not automatically avoided..


I respectfully disagree with Maths on the point quoted above. If both P1 and P2 are sold before the acquisition of P3, the higher rates of stamp duty land tax should not apply as this will be the buyer's only property. It does not matter what they intend to use it for.

Shropshiretom
Posts: 8
Joined: Sun Dec 11, 2016 9:57 pm

Re: Employer supplied accomm and PPR and BTL

Postby Shropshiretom » Tue May 02, 2017 10:22 am

Hi SDLT

The issue is that Property 1 has been our nominated principal residence since 2010. We nomintated it because we live in employer supplied accommodation - but at some point in the future - when it came time to retire we would need a home to live in. And there has never been any question that this is allowable with HMRC.
Property 2 really falls outside this issue completely - I probably don't need to mention it. It was bought, and tenanted, and now I am going to sell it and pay the capital gains due. Next year (2018) we are going to retire and it is our intention to retire into Property 3 - which we are in the process of buying. I won't be selling Property 1 - because it is a good little earner. I just don't want to pay the increased stamp duty on the purchase of Property 3. I don't have any intentions of renting out Property 3 between the date of purchase and taking up residence in 2018. I want to file a nomination with HMRC nominating Property 3 as my main residence - but I don't own it yet. The solicitor would like to charge me/us 1+3% stamp duty on the purchase of Property 3. But it truly will be my main residence

someone
Posts: 126
Joined: Mon Feb 13, 2017 10:09 am

Re: Employer supplied accomm and PPR and BTL

Postby someone » Tue May 02, 2017 10:39 am

The rules are complicated but basically:

If you:

a) Own two or more properties at the end of the transaction
and
b1) Did not dispose of your previous main residence
or
b2) Did not buy a new main residence

Then you have to pay the higher rate SDLT.

At the end of your transaction you will own two properties: P1 and P3 (a)
At the end of your transaction you will not have disposed of your previous main residence P1 (b1) (but see below that a disposal of P1 might not, of itself, be sufficient to avoid the higher SDLT charge)

Therefore you have to pay the higher rate SDLT.

Note that for SDLT properties, the main residence is determined on the facts. Therefore your CGT election is not definitive that P1 is your main residence for SDLT even if it is for CGT. On the facts as given it appears that P1 cannot possibly be your main residence for SDLT purposes as it's not your residence at all.

Shropshiretom
Posts: 8
Joined: Sun Dec 11, 2016 9:57 pm

Re: Employer supplied accomm and PPR and BTL

Postby Shropshiretom » Tue May 02, 2017 10:55 am

Hi Someone

I definitely don't want to fall foul of the taxman. In order to avoid CGT I have nominated P1 as my PPR - since 2010.

I've never lived in it - but it was my intention to live in it - until a couple of weeks ago when I saw a house that I like better - which I have offered on and expect to complete on in the next 8-10 weeks.

Can I seriously say to my solicitor that the next purchase of Property 3 is my main residence for SDLT purposes and that I should not have to pay the increased stamp duty of 1+3%? Regardless of my election for CGT purposes?

someone
Posts: 126
Joined: Mon Feb 13, 2017 10:09 am

Re: Employer supplied accomm and PPR and BTL

Postby someone » Tue May 02, 2017 11:45 am

No.

Additional rate SDLT isn't avoided by buying a main residence. It's avoided by either:

a) buying your ONLY property (makes no difference if it's a main residence or not)
b) replacing your main residence.

What this means is that if you buy a BTL and a main residence then you will pay the additional rate SDLT on the second purchase regardless of what order you buy them in.

The rules are complicated and based on various questions on this site it appears that solicitors aren't always getting it right - in particular people buying their first property which happens to be a BTL are being told they have to pay the higher rate - but in your case it appears that your solicitor is correct.

As maths alluded to earlier, selling P1 after you've bought P3 will still not get you a refund of the additional SDLT as it's not a main residence for SDLT purposes. As far as I can tell, the only way for you to avoid the higher rate SDLT is to sell all your properties before buying P3.


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