New reates as of 8th July

[KeithM]

Hi

Don't usually have much to talk about in the way of tax issues but a bit confused currently by some sites. Governments site comes up with zero tax and others £5550.

Currently living in own house with small mortgage left on it but going to be moving out.

Buying other house to move into with <50% residential mortgage on it and equity in current house used for a BTL mortgage.

Gov site says will you own more than one property, yes, are you replacing your main residence, yes - so that gives 0

Other sites just say additional property etc, £5550 to pay.

Any ideas??

Thank you.

[robbob]

Keith M

Your question is slightly confusing can you clarify exactly what you are asking? - note if you complete the tool it is reasonably clear that if you do not sell your existing main residence then you are not replacing your main home therefore the eztra 3% stamp duty is charged - this is presuming you now own multiple properties. You similarly pay the extra 3% if you own BTL and moved from rented residence to new owned property. Basically the only exemption from 3% when you own more than one property is when you sell your main residence and replace that with new one. There is the chance to claim 3% back later if paid and you sell within the relvant time period after you have bought property 2 - so the replacement doesnt need to be done at the same time - but if done later you will pay the 3% back until such time as you do sell.

Tax warning - if you have high increase in value in house since you purchased and rent that house out for material peirod of time you could end up with very nasty capital gains tax bill - as tax is based on difference between price paid and sold with no inflationary adjustment. You get pro rata relief for time as main residence and minor other relief but if you bought for 50k and its worth 250k - from a tax point of view at the time the pro rata calc ramps up the tax you can save material tax by selling uisng your exemption and replacing with current marekt value replacement with much higher badse cost. The problem with this plan is it may come with lareg cash cost selling and buying elsewhere. You can own till you die and the capital gains bit of teh problem goes away.

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/additional-property

Is the property being purchased replacing your main residence?
If your previous main residence has not yet been sold choose "No". A refund may be available if the previous main residence is sold within 3 years.

[KeithM]

Hi

Thank you for the reply.

We will be keeping the current house and releasing equity with a BTL mortgage to buy the house that we will then move into. There will then also be a small residential mortgage on the new property.

We are then renting out the old property.

So i would say the main residence is the new house. i.e. we are replacing our main residence.

And yes. Had the curent house 21 years so value has jumped up a bit!

[robbob]

We will be keeping the current house
So i would say the main residence is the new house. i.e. we are replacing our main residence.

You are not replacing your main residence for stamp duty purposes !
as per the previus post the linked guidance is clear on this point when you dig into the detail.

per hmrc q and a

Is the property being purchased replacing your main residence?
If your previous main residence has not yet been sold choose "No". A refund may be available if the previous main residence is sold within 3 years.

[SDLT Geek]

You are not “replacing” your main residence unless you meet a number of conditions, one of which is that you sold / disposed of a previous home within the last three years.