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Where Taxpayers and Advisers Meet

Buying a second home - stamp duty

Posts: 3
Joined: Thu Dec 06, 2018 11:13 am

Buying a second home - stamp duty

Postby mhuk01 » Sat Jan 12, 2019 3:05 pm

We currently own a flat worth £105,000 outright, and want buy a home for approx £170,000 whilst keeping our original flat to rent out.

It appears we will be stung by £6,000 in stamp duty, which is a huge chunk for us (particularly as my wife is a first time buyer!) Are there any ways to minimise this? One slightly out of the box thought I had was this: -

When purchasing our £170,000 property, to sell our £105,000 flat for a nominal fee to a family member temporarily. Then a few months later buy back the property for the same nominal fee, presumably incurring 2nd home stamp duty at 'market value' rate, which would come to £3,150. If this is feasible we would £2,850 minus any mandatory legal fees involved with completing the transactions.

Is this a crazy thought? Or are there any other possible ways to keep the stamp duty cost down?



Posts: 770
Joined: Fri May 16, 2014 3:47 pm

Re: Buying a second home - stamp duty

Postby AGoodman » Mon Jan 14, 2019 6:55 pm

No, I very much doubt it would work.

There are a variety of ways of attacking it including, possibly, s.75A Finance Act 2003 - which contains a wide anti-avoidance provision.

You would also have to consider any duty to disclose the plan under DOTAS and whether it would be caught by GAAR.

In the very unlikely case that it did work, the costs of demonstrating this would be far in excess of the saving.

Posts: 220
Joined: Tue Sep 26, 2017 6:28 pm

Re: Buying a second home - stamp duty

Postby AdamS93 » Mon Jan 14, 2019 8:02 pm

I agree with Agoodman.

Not to mention the other tax implications, namely capital gains tax and inheritance tax.

You've got your SDLT blinkers on.

Posts: 3
Joined: Thu Dec 06, 2018 11:13 am

Re: Buying a second home - stamp duty

Postby mhuk01 » Wed Jan 16, 2019 10:21 am

Thank you both for your honest replies - always worth checking with others regarding potential loopholes.

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