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Where Taxpayers and Advisers Meet

Replace Main residence SDLT

PParking
Posts:5
Joined:Sat Apr 28, 2018 5:44 pm
Replace Main residence SDLT

Postby PParking » Sat Apr 28, 2018 6:07 pm

Hi,
Wondered if someone could point me in the right direction please?
18 months ago we (wife and I) purchased an additional property (House B) and moved into it but did not sell our previous home (House A) which we had lived in for approx. 15 years. House A is rented out (its has a BTL mortgage).
Our intention was never to stay in House B long term and we now intend to sell House A to purchase a new long term home (House C). We are considering renting out House B on which we paid the additional SDLT.

My question is: When we purchase House C will we be liable for the higher rate SDLT? We intend to sell House A before purchase of C.

Many thanks.

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Replace Main residence SDLT

Postby AdamS93 » Sun Apr 29, 2018 11:22 am

Sounds like you will be paying the higher SDLT rates as currently your main residence is B.

You could move back into property A but the hassle and cost of the two moves are likely to outweigh the costs of the additional SDLT.

PParking
Posts:5
Joined:Sat Apr 28, 2018 5:44 pm

Re: Replace Main residence SDLT

Postby PParking » Sun Apr 29, 2018 12:05 pm

Thanks,

That's what we initially thought but having read around a bit I wasn't sure as there appears to be some latitude in determining what is the main residence?
I also came across this: www.zoopla.co.uk/discover/buying/12-month-countdown-to-escape-second-home-stamp-duty which appears to mirror the situation we find ourselves in?

2. You've sold a property you last lived in before 26 November 2015

C and D bought Property 1 together in 2002 and lived in it until 2006 when they bought Property 2. But they didn’t sell Property 1 – they rented it out to tenants instead.

Now, C and D are buying another home – Property 3 – to live in, at a cost of £500,000. But to fund the purchase, they will first need to sell Property 1. This time, they will keep Property 2 which is worth £200,000.

If they complete the purchase by 26 November 2018 they will escape the surcharge on Property 3 and the SDLT is £15,000

If they complete after 26 November 2018 the 3% loading will apply to Property 3 and the SDLT will cost £30,000

Why? C and D once lived in Property 1 as their only residence (the fact they have also lived in Property 2 since is irrelevant).

But because they last lived in Property 1 more than three years ago, to make use of replacing main residence rules, they need to complete the purchase of the new property by 26 November 2018.

Read more at https://www.zoopla.co.uk/discover/buying/12-month-countdown-to-escape-second-home-stamp-duty/#dfp16uAo0hzDy0Wm.99

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Replace Main residence SDLT

Postby maths » Sun Apr 29, 2018 5:02 pm

The purchase of C whether after 26 Nov 2018 or on or before should not incur the 3% charge.

This assumes A was a sole/main residence within 3 years of the purchase of C (or at anytime pre C's purchase if purchase of C on or before 26 Nov 2018).

SDLT Geek
Posts:232
Joined:Sun Apr 30, 2017 5:45 pm

Re: Replace Main residence SDLT

Postby SDLT Geek » Sun Apr 29, 2018 7:16 pm

I agree witm maths.

PParking
Posts:5
Joined:Sat Apr 28, 2018 5:44 pm

Re: Replace Main residence SDLT

Postby PParking » Sun Apr 29, 2018 11:28 pm

Thanks both.
I'm in no way doubting what you say (and it's difficult to convey on a BB that I really am not!) but should my conveyancing solicitor disagree are you able to provide the legislation?
Many thanks,
PP

PParking
Posts:5
Joined:Sat Apr 28, 2018 5:44 pm

Re: Replace Main residence SDLT

Postby PParking » Sun Apr 29, 2018 11:30 pm

ps...
Thanks Maths. The 3 year point is well understood. i.e Mid 2016 implies need to complete transactions by mid 2019.

SDLT Geek
Posts:232
Joined:Sun Apr 30, 2017 5:45 pm

Re: Replace Main residence SDLT

Postby SDLT Geek » Mon Apr 30, 2018 9:50 am

You could refer your solicitor to FA2003/Sch4ZA/para3(5).

Unfortunately the guidance in this area is not as clear in the Manual (from the end of March 2018) as it was in the Guidance Note updated November 2016, but it is useable. Here is a link: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

PParking
Posts:5
Joined:Sat Apr 28, 2018 5:44 pm

Re: Replace Main residence SDLT

Postby PParking » Mon Apr 30, 2018 11:09 am

Many thanks.


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