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Where Taxpayers and Advisers Meet

Help needed from a kind SDLT expert!

halesk1
Posts:7
Joined:Fri May 15, 2020 9:35 pm
Help needed from a kind SDLT expert!

Postby halesk1 » Fri May 15, 2020 9:41 pm

In need of a little help from any kind SDLT expert here!

I own two homes, A and B. I’ve registered A with HMRC and they’ve replied to confirm it’s my “main residence” under something called s222(5) TCGA 1992.

I want to sell A and replace it with a new main residence, C, as soon as I find one. I’ll live in B in the meantime.

I’m guessing that when I buy C (having already sold A) I’ll have to pay the extra 3% SDLT because I still own B, even though it was a second home and I intend it to stay as such.

But will I be able to reclaim from HMRC the 3% once I buy and register C as my new main residence? Or does B automatically become my main residence after A is sold (because at that point B is the only home I have) so C automatically becomes, and stays, a second home - on which I cannot reclaim the 3%?

Thank you.

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

Re: Help needed from a kind SDLT expert!

Postby SDLT Geek » Fri May 15, 2020 10:03 pm

The system of cgt elections has no relevance to SDLT. For SDLT whether a property is a main residence is a matter of fact.

If property A as a matter of fact is your main residence and you sell it, then within 3 years buying property C intending to live in it as your main residence, the 3% surcharge should not apply. It does not matter that you keep property B, nor that you live in it in the meanwhile.

The detail is set out fairly well in SDLTM09800. Take with a shovel of salt the misleading guidance on this point in the brief .gov.uk guidance. You could search for a case study on the point involving Florence. I will see if I can put up a link.

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

Re: Help needed from a kind SDLT expert!

Postby SDLT Geek » Fri May 15, 2020 10:04 pm

Here is that link:
https://www.blakemorgan.co.uk/sdlt-3-surcharge-hmrcs-mistake-on-replacement-of-only-or-main-residence/

halesk1
Posts:7
Joined:Fri May 15, 2020 9:35 pm

Re: Help needed from a kind SDLT expert!

Postby halesk1 » Fri May 15, 2020 10:15 pm

The system of cgt elections has no relevance to SDLT. For SDLT whether a property is a main residence is a matter of fact.

If property A as a matter of fact is your main residence and you sell it, then within 3 years buying property C intending to live in it as your main residence, the 3% surcharge should not apply. It does not matter that you keep property B, nor that you live in it in the meanwhile.

The detail is set out fairly well in SDLTM09800. Take with a shovel of salt the misleading guidance on this point in the brief .gov.uk guidance. You could search for a case study on the point involving Florence. I will see if I can put up a link.
Oh wow, thanks for the prompt and very helpful reply. I'll study that link as well. Can there be any tax in the UK that is more opaque and obscure than SDLT for a layman (even a reasonably financially savvy one like me) to understand? I'd always "assumed" that by bothering to inform HMRC, and them replying, that it would cover off both CGT and SDLT matters. Seems not!

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

Re: Help needed from a kind SDLT expert!

Postby maths » Sat May 16, 2020 1:30 pm

The provisions of all taxes, not just SDLT, are often contradictory, ambiguous and/or plain undecipherable. I would say its pretty impossible for someone without a tax background to seek to understand them without a real commitment.

HMRC offer so-called "help" but invariably they're wrong. They'll even challenger their own guide Manuals if they feel it's in their interest.

If an individual has two homes and makes an election for one of them to be categorised as their "main" residence (applicable for CGT) it wouldn't be unreasonable for such individual to assume that the residence chosen as their main residence would also apply for SDLT purposes; however, that's far too easy. As SDLTGeek points out the election for CGT is inapplicable for SDLT.

Anyway, how would we so-called tax advisors earn a living otherwise???


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