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Where Taxpayers and Advisers Meet

Stamp Duty and Rental Property

alecthorne
Posts:2
Joined:Mon Sep 06, 2021 9:33 am
Stamp Duty and Rental Property

Postby alecthorne » Mon Sep 06, 2021 10:40 am

I have a question regarding stamp duty. I have lived in Germany for 20 years while owning a property in the UK that has been continually rented out for over 15 years.

I am looking to return to the UK and purchase a new property, while keeping the old one rented out – not selling it. As I understand, the new property in this scenario is classed as a main residence (as the old one is rented out), resulting in the lower stamp duty rates.

My problem is with the following two scenarios. Will the new property still be classed as a main residence, or as an additional property which then incurs the higher stamp duty rates?

Scenario 1 – I move to the UK and live in my old property to give me time to find a new one. On purchase of the new property and on moving out of the old one, the old one is rented out again.

Scenario 2 – I move to the UK and initially live in my old property. I use this time to find a rental property (12 months for example) and then rent out my old UK property again. I then, while living in the new rental property, purchase my new home.

Any thoughts and help would be much appreciated.

bd6759
Posts:3588
Joined:Sat Feb 01, 2014 3:26 pm

Re: Stamp Duty and Rental Property

Postby bd6759 » Mon Sep 06, 2021 7:04 pm

The test is the number of dwellings you will own at the end of the day on which you buy a dwelling. If the answer is two or more,you are potentially liable to the higher.

There is an exclusion if, in the three years prior to that time, you have disposed of a dwelling that you used as your main residence. So if you have sold a dwelling in Germany, this exclusion will apply.

If you have not sold a residence then you will be liable to the additional unless you sell the rental property before you buy another. This is because you will own 2 properties. It does not matter that you intend this to be your residence.

alecthorne
Posts:2
Joined:Mon Sep 06, 2021 9:33 am

Re: Stamp Duty and Rental Property

Postby alecthorne » Tue Sep 07, 2021 10:59 am

Many thanks for the reply. You mentioned 'The test is the number of dwellings you will own at the end of the day'. Does the term dwelling include the property I mentioned that is currently rented out, and would remain rented out? If not, then I can purchase the new property as my main residence and not be taxed using the higher rate??

someone
Posts:521
Joined:Mon Feb 13, 2017 10:09 am

Re: Stamp Duty and Rental Property

Postby someone » Wed Sep 08, 2021 6:11 am

Yes. Roughly speaking, dwellings are properties people can or do live in. So empty or let doesn't matter, it still counts.


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