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Stamp duty, living abroad, brexit

jammie
Posts: 5
Joined: Sun Jul 16, 2017 11:24 am

Stamp duty, living abroad, brexit

Postby jammie » Sun Jul 16, 2017 11:47 am

We sold up in the UK in 1993 and have lived in rented accomodation in the EU ever since.We are now retired. We inherited a property some 7/8 years ago which is rented out. It's not a property that we would choose to live in. Due to family commitments and In the light of Brexit, we would like for our own piece of mind, to have a home in the UK that we own. We would like to continue to split our time between the EU and UK for as long as possible. We have a property in mind and would like to purchase it for the future should Brexit come to the worst. For the time being, we would live there for a few months and return to the EU for a few etc etc. We would like to rent it out during the time we are not there mainly due to insurance and maintenance issues. As this will be our main residence in the UK and as we do not own our other main residence in the EU, would we be liable for stamp duty ?
Our main problem is that even as cash buyers, conveyancing and chains can seriously impact on the length of time needed to purchase a property. This is why a purchase cannot be a last minute thing but needs to be planned for the future.
Anyone got any insights ?

AnthonyR
Posts: 174
Joined: Wed Feb 08, 2017 2:33 pm

Re: Stamp duty, living abroad, brexit

Postby AnthonyR » Sun Jul 16, 2017 1:12 pm

You will already own another property at the point of purchasing the UK home, which means that you will pay the extra 3%.

Since you don't have a home to sell you won't be able to reclaim the extra 3% I'm afraid. Only way around it would be to sell the rental before you purchased your home.
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

jammie
Posts: 5
Joined: Sun Jul 16, 2017 11:24 am

Re: Stamp duty, living abroad, brexit

Postby jammie » Sun Jul 16, 2017 2:31 pm

Thanks for your reply.

My research came up with,
1. Stamp duty is not payable if the following applies. Paragraph 3.19A of the government upload states "
For purchases on or before 26 November 218 , there is a replacement of a main residence if, at any time before the purchase, the purchaser, or their spouse, disposed of a major interest in another dwelling and the purchaser has not purchased another main residence in the period between that disposal and the new purchase. That other dwelling must have been, at some time, the only or main residence of the purchaser.
"

The above fits my situation. I sold my main residence in 1993. The inherited property was not purchased as a main residence and has never been one.

The following article also seems to confirm this

http://www.telegraph.co.uk/investing/buy-to-let/the-stamp-duty-tax-loophole-that-could-save-buyers-thousands/
"
For existing property owners to be exempt, they must be buying a main residence rather than a second home or investment property and have previously owned another main residence that they sold at any time before the announcement of the stamp duty surcharge on November 26 2015.
Anyone who fits these criteria has until November 26 2018 – three years after the announcement in last year’s Autumn Statement – to buy an additional home without paying the extra stamp duty.
For example, a landlord who owns buy-to-let properties but currently lives in rented accommodation and sold their previous home before November 2015 can buy a new home without paying the surcharge
"

I appreciate your answer but wonder how do you see the above two points not applying to my situation ?

AnthonyR
Posts: 174
Joined: Wed Feb 08, 2017 2:33 pm

Re: Stamp duty, living abroad, brexit

Postby AnthonyR » Sun Jul 16, 2017 3:24 pm

Apologies, under the legislation there is a 3 year window to purchase a new main residence to avoid the additional 3%.

However, there are (of course) transitional rules which apply until 26 November 2018, meaning that if you buy your new main residence before that date the 3 year rule doesn't apply (as long as you haven't owned a major interest in a main residence since then).

It seems that as long as you buy your new home before this date you will not be subject to the additional 3%.
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

jammie
Posts: 5
Joined: Sun Jul 16, 2017 11:24 am

Re: Stamp duty, living abroad, brexit

Postby jammie » Sun Jul 16, 2017 4:31 pm

Thank you again for your reply, this is what I thought and I'm glad you agree with me. I am concerned however that it is not patently obvious and that the taxman may still give me grief.
My other concern is the fact that I will maintain two main residences, one rented in the EU and this proposed purchase in the UK. I worry about leaving it empty so want to rent it out whilst I am not here so consequently worry that it may be seen as a buy-to-let. Does it state anywhere that I have to live 24/7 in it ? My main residence in EU is always occupied as I have dependent children so does not pose the same problem.
Once Brexit comes into force the likelihood is that I will live in the UK permanently.
Any tips on making the situation clear to the taxman would be appreciated.

bd6759
Posts: 2231
Joined: Sat Feb 01, 2014 3:26 pm

Re: Stamp duty, living abroad, brexit

Postby bd6759 » Sun Jul 16, 2017 11:33 pm

The first question to ask is how many properties will you own at the end of the day when you buy your UK residence?

If you only own one, the additional 3% will not apply.

If you own more than one, the 3% will apply unless you are replacing your residence. That means the new home must be your residence. It cannot be you residence if you rent it out.

jammie
Posts: 5
Joined: Sun Jul 16, 2017 11:24 am

Re: Stamp duty, living abroad, brexit

Postby jammie » Mon Jul 17, 2017 6:34 am

Do you know how long I would have to physically live in it before I could rent it out ?

maths
Posts: 6894
Joined: Wed Aug 06, 2008 3:25 pm

Re: Stamp duty, living abroad, brexit

Postby maths » Mon Jul 17, 2017 4:18 pm

The legislation provides that at the date of "completion" of the purchase the purchaser intends the dwelling to be the purchaser's only or main residence.

"Intention" is tricky to prove. However, for what it's worth HMRC's view is as follows:

"The test in respect of the new dwelling purchased is a question of intention, does the purchaser intend the dwelling to be his only or main residence? This is a question of intention at the time of purchase, what has the purchaser acquired the property for? The intention test will not only be met if there is an intent to immediately occupy, if some works are to be undertaken before occupation commences, or a short lease is in place before purchase, then this does not prevent the test from being met. If the dwelling is intended to be put to other uses, for example as a source of income, then the intention test will not be met. There may be rare cases of the purchaser’s genuine intention at the time of purchase being frustrated by events." [my italics]

When they say a "source of income" it's unclear (at least to me) what is exactly meant. If a property is bought with a buy to let mortgage then prima facie this would suggest that it hasn't been purchased with an intention as a sole/main residence.

To some extent "intent" on the day of completion where a person does not move immediately into the property will be ascertained after the event. I would suggest that, for example, if after purchase, work is commenced on the property pretty well straight away (making it uninhabitable for a period) and then on finishing the works a person moves in, intent will be satisfied. If you purchase now whilst abroad with the requisite intent that you carry through on your return I suggest intent has been satisfied.

That intent should not be affected if you let it out pending return to the UK. However, in practice a letting of 2 years might be seen as provocative to HMRC.

The longer between date of purchase and actually moving in, the less likely HMRC will accept intent was satisfied at date of purchase.

It should also be noted that the residence must be the main residence where two or more residences exist.

SDLT Geek
Posts: 35
Joined: Sun Apr 30, 2017 5:45 pm

Re: Stamp duty, living abroad, brexit

Postby SDLT Geek » Mon Jul 17, 2017 8:58 pm

One factor that is relevant to assessing which property someone lives in as their only or main residence is where the rest of the immediate family live. It sounds as if you will have two places you will split your time between, the rented EU property and the English place you buy. If your dependant children stay in the rented EU property then that is a factor suggesting the EU property remains your main residence.

jammie
Posts: 5
Joined: Sun Jul 16, 2017 11:24 am

Re: Stamp duty, living abroad, brexit

Postby jammie » Mon Jul 17, 2017 10:51 pm

The way I see it is that the UK property will be my main residence when in the UK and the EU rental will be my main residence when not in the UK. I don't know how to get around this, the EU encouraged freedom of movement and yet this now seems to be a sticking point.


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