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Where Taxpayers and Advisers Meet

nominating second property and SDLT

maria100luisa
Posts:7
Joined:Tue May 22, 2012 6:37 pm
nominating second property and SDLT

Postby maria100luisa » Sun Nov 28, 2021 2:20 am

I've moved back to the UK into my flat which has been rented out for about two years in the time I was away, I had it since 2006 so it has been my main residence much longer

I have returned with kids and a partner and we are looking to move asap

We are not married and I understand we can nominate a main residence. I can't find the answer to my question online and wondered if anyone could help.

The new property will be jointly owned. If I don't sell my current property and nominate it as my main residence and my partner nominates our jointly owned new property as his, will there be any CGT on sale?

Also it will be my partner's first property, but my third as I have a BTL. Will we have to pay the higher rate stamp duty rate of tax because of this?

Thanks for any help

someone
Posts:544
Joined:Mon Feb 13, 2017 10:09 am

Re: nominating second property and SDLT

Postby someone » Wed Dec 01, 2021 11:12 am

I'll try to answer as nobody else has.

1. Nominating a primary residence - you have to have more than one residence for this to apply. You don't state what is happening to your existing property when you buy the new one but if you're intending to let it then nomination is irrelevant. If you're intending to keep it as a second home then you can (and should) make an election if you have more than one residence. Note that a residence is "somewhere you live" not "somewhere you own" or "somewhere people live." Primary residence elections can be backdated up to two years but can only be made within two years of your residences changing or if a previous election has been made (which is why you should make an election - it gives you the option to change it later.

2. second home SDLT will be payable if any of the purchasers of the new property will own two or more properties on the date of completion (and none of the exemptions apply). Therefore if you are going to be joint owners of the new property then it will be due (on the full amount)

3. If you do keep two residences then, as you are not married you can nominate different primary residences, but if you nominate the existing property then you will pay CGT on your share of the jointly owned property should you sell it.

maria100luisa
Posts:7
Joined:Tue May 22, 2012 6:37 pm

Re: nominating second property and SDLT

Postby maria100luisa » Thu Dec 02, 2021 2:21 am

Thanks ever so much for your reply.

I'd nominate my current flat as my primary residence and use it to stay in overnight when I go into the office since I'll move further out. It won't be rented out.

If I own a smaller percentage on the deeds of the new house me and my partner buy together, would it reduce my CGT bill once we come to sell?

Cheers

someone
Posts:544
Joined:Mon Feb 13, 2017 10:09 am

Re: nominating second property and SDLT

Postby someone » Fri Dec 03, 2021 11:33 am

If I own a smaller percentage on the deeds of the new house me and my partner buy together, would it reduce my CGT bill once we come to sell?
Yes. And you won't pay any CGT at all if you don't own any of it at all, nor higher rate SDLT.

But remember that if you own less of the property then you'll get less of the proceeds of any sale too - which probably doesn't matter if all goes well but if you and your partner have a falling out then you should consider what your position will be. My understanding is that because you're not married your rights are very limited and it's very often just "what's yours is yours, what's theirs is theirs".

And you potentially need to think about IHT and wills too. Unless you are joint tenants you will have no rights to their share of the property should they die unless they've made a will. (ditto the other way around). And note that a joint tenancy can be severed by either party so insisting on one now doesn't guarantee that it will stay one.

Worrying about minimising a possible CGT bill sometime in the future without also thinking about other scenarios that are likely to be more problematic in practice is short sighted.


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