Where Taxpayers and Advisers Meet

Selling second home to buy new main residence

rlc103
Posts: 5
Joined: Thu May 18, 2017 10:12 pm

Selling second home to buy new main residence

Postby rlc103 » Thu May 18, 2017 10:41 pm

hey - Just wanted some advice from anyone in regards to stamp duty on buying our new home.
Here's the situation:
Both my wife and I own our own flats for the last few years, met and got married April 2016. My flat is in London and hers in Brighton.
Due to our Jobs being quite far away at that time, we did not immediately live together; she lived in her flat and I lived in mine from April 2016 - October 2016.
She then got a 1 year job in London and moved into my flat in October 2016, where she is still living now.
We have now made the decision to sell her Brighton flat, and buy a larger house in Brighton which will be our primary residence and have kids.

It is my understanding that we won't have to pay the higher stamp duty rate as:
1. The Brighton flat has been my wife's main residence within the last 18 months and
2. The new house will be our main residence

If this is correct, we should still be able to buy the new house before selling the old. In that case we would pay the higher stamp duty, and get a refund upon sale of (my wife's) previous "main residence".

I fear HMRC could kick up a fuss, based on Brighton never being my "main residence".

Thanks

someone
Posts: 96
Joined: Mon Feb 13, 2017 10:09 am

Re: Selling second home to buy new main residence

Postby someone » Fri May 19, 2017 7:27 am

http://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted

I think your problem is going to be 3(6)(c)

someone
Posts: 96
Joined: Mon Feb 13, 2017 10:09 am

Re: Selling second home to buy new main residence

Postby someone » Fri May 19, 2017 7:53 am

Why not sell your london flat instead. That will be your wife's main residence too so 3(6)(c) will be satisfied for her. If you're moving back to Brighton then do you need to keep the London property?

rlc103
Posts: 5
Joined: Thu May 18, 2017 10:12 pm

Re: Selling second home to buy new main residence

Postby rlc103 » Fri May 19, 2017 9:29 am

someone wrote:http://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted

I think your problem is going to be 3(6)(c)


3(6)(C)- "at any time during that period of three years the sold dwelling was the purchaser’s only or main residence"
This was the purchaser's main residence within the last 3 years. Unlike capital gains, you cannot elect which is our main residence when it comes to stamp duty. How will they define our "main residence" between April and October 2016? This is very poorly defined, and only presumes that the married couple is living together

someone
Posts: 96
Joined: Mon Feb 13, 2017 10:09 am

Re: Selling second home to buy new main residence

Postby someone » Fri May 19, 2017 9:44 am

rlc103 wrote:
someone wrote:http://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted

I think your problem is going to be 3(6)(c)


3(6)(C)- "at any time during that period of three years the sold dwelling was the purchaser’s only or main residence"
This was the purchaser's main residence within the last 3 years. Unlike capital gains, you cannot elect which is our main residence when it comes to stamp duty. How will they define our "main residence" between April and October 2016? This is very poorly defined, and only presumes that the married couple is living together


Hmmm. I see what you're saying. From April to October you can only have had one main residence. If it was your wife's flat then selling that will avoid the additional SDLT. I have absolutely no idea how this could be decided.

someone
Posts: 96
Joined: Mon Feb 13, 2017 10:09 am

Re: Selling second home to buy new main residence

Postby someone » Fri May 19, 2017 9:52 am

Where did you pay council tax after you were married? Prior to being married you, presumably, got a single persons discount at each flat. After being married one will have been occupied by two people and the other empty/second home.

rlc103
Posts: 5
Joined: Thu May 18, 2017 10:12 pm

Re: Selling second home to buy new main residence

Postby rlc103 » Fri May 19, 2017 9:58 am

someone wrote:Where did you pay council tax after you were married? Prior to being married you, presumably, got a single persons discount at each flat. After being married one will have been occupied by two people and the other empty/second home.


I paid council tax in London. I had a lodger living with me at the time. She paid council tax in Brighton flat. Stupidly she didn't get single persons discount!

rlc103
Posts: 5
Joined: Thu May 18, 2017 10:12 pm

Re: Selling second home to buy new main residence

Postby rlc103 » Fri May 19, 2017 11:18 am

rlc103 wrote:
someone wrote:Where did you pay council tax after you were married? Prior to being married you, presumably, got a single persons discount at each flat. After being married one will have been occupied by two people and the other empty/second home.


I paid council tax in London. I had a lodger living with me at the time. She paid council tax in Brighton flat with single persons discount

rlc103
Posts: 5
Joined: Thu May 18, 2017 10:12 pm

Re: Selling second home to buy new main residence

Postby rlc103 » Fri May 19, 2017 11:30 am

someone wrote:
rlc103 wrote:
someone wrote:http://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted

I think your problem is going to be 3(6)(c)


3(6)(C)- "at any time during that period of three years the sold dwelling was the purchaser’s only or main residence"
This was the purchaser's main residence within the last 3 years. Unlike capital gains, you cannot elect which is our main residence when it comes to stamp duty. How will they define our "main residence" between April and October 2016? This is very poorly defined, and only presumes that the married couple is living together


Hmmm. I see what you're saying. From April to October you can only have had one main residence. If it was your wife's flat then selling that will avoid the additional SDLT. I have absolutely no idea how this could be decided.


I think the deciding factor in whether we pay higher stamp duty is which property is the "main residence" between april and October 2016. As you said, how this will be decided is very unclear

maths
Posts: 6580
Joined: Wed Aug 06, 2008 3:25 pm

Re: Selling second home to buy new main residence

Postby maths » Fri May 19, 2017 3:55 pm

You and your wife are to make a joint purchase of a dwelling which you each intend to be presumably your main residence.

Assume the Brighton flat owned only by wife is sold prior to acquisition of new joint purchase.

It seems strongly arguable that the London flat owned by you is the main (albeit not sole) residence of yourself and your wife from October 2016.

In which case the 3% SDLT charge should not apply.


Return to “Stamp Duty, Stamp Duty Land Tax, SDLT”