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Where Taxpayers and Advisers Meet

one main residence one btl: flipping, selling and buying a new residence

mrossi
Posts: 1
Joined: Sat Jan 19, 2019 5:16 pm

one main residence one btl: flipping, selling and buying a new residence

Postby mrossi » Sat Jan 19, 2019 5:57 pm

Situation: 1 main residence (on residence mortgage); 1 BTL (on BTL mortgage) both in Scotland
Rationale: "selling up your main residence to buy a new one will not attract 3% second home stamp duty, even if you have a current BTL"
Plan: selling up the main residence in Scotland to buy a new one in England (BUT see below...)
Action: Converting the BTL as my main residence and the main residence as BTL (bank will update mortgages types no problems). Then, selling up the property with main residence status (ex BTL) to buy a new residence.
Final situation: still only 2 properties owned: 1 main residence, 1 BTL
Question: will this transaction still attract the 3% second home stamp duty, or will it fall under the rationale listed above?

**I'm getting loads of conflicting advices from "tax advisors"** Any help will be much appreciated, thanks

AGoodman
Posts: 810
Joined: Fri May 16, 2014 3:47 pm

Re: one main residence one btl: flipping, selling and buying a new residence

Postby AGoodman » Mon Jan 21, 2019 11:59 am

1. You will need to pay CGT on the sale of the (current) BTL

2. In order to make it a residence you will likely have to move into the BTL with a degree of permanence. That comes from CGT cases but is likely to apply here as well. That is difficult to establish at all if you are moving in with the intent of selling but will be harder the shorter your time in occupation is. Two years - probably fine. 6 months - not fine. Somewhere in-between - a risk.

someone
Posts: 377
Joined: Mon Feb 13, 2017 10:09 am

Re: one main residence one btl: flipping, selling and buying a new residence

Postby someone » Mon Jan 21, 2019 2:25 pm

You might want to look at Ellis v HMRC [2013]. It would appear, from that, that if you first convert the BTL to a residence, and then make a CGT election prior to disposing of your current residence, you might be able to finesse your way around the 'quality of occupation' issues.

Depending on whether the current BTL is fully furnished or not, you might find yourself having to buy a lot of furniture to get the current BTL to qualify as a residence *as well as* your current residence. In order to make an election you must have two residences.


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