BTL investor to pay Stamp Duty surcharge for first main residence?

by Readers Question

8:23 AM, 10th January 2017
About 2 years ago

BTL investor to pay Stamp Duty surcharge for first main residence?

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BTL investor to pay Stamp Duty surcharge for first main residence?

I’m currently in the process of buying a property for myself and my partner to live in. We both currently live with our parents so this is will be our first and only residential property.FTB

I have a number of rental properties, all which are rented out and on buy to let mortgages. I have never lived in any of them or have claimed them as my residence.

My solicitor has advised me that we will have to pay the additional 3% stamp duty at the time of purchase.

Is this correct?

He mentioned that there may be a case for us to claim this back as it will be our first residential property. I’ve looked online but I can’t seem to find much information which relates specifically to the situation we find ourselves in.

Any advice would be much appreciated.

Nick

Stamp



Comments

Neil Patterson

8:37 AM, 10th January 2017
About 2 years ago

Hi Nick,

If you follow the guide above to the letter then you pay the extra surcharge on Stamp Duty.

I have also copied the .Gov website information below and it is obvious that your exact circumstance has not been clearly defined separately in the rules. Therefore I think your solicitor playing it safe can only assume you do pay the extra amount without further guidance.

Therefore I think this needs a phone call to HMRC unless another reader has already asked them this question.

I also put your example in the official Stamp Duty calculator and answered the specific questions which did not include is this your first main residence and it came up with the additional charge.

>> https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

"Higher rates for additional properties

You’ll usually have to pay 3% on top of the normal SDLT rates if buying a new residential property means you’ll own more than one.

Use the SDLT calculator to work out how much tax you’ll pay.

You may not have to pay the higher rates if you exchanged contracts before 26 November 2015.
If you’re replacing your main residence

You won’t pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

If there’s a delay selling your main residence and it hasn’t been sold on the day you complete your new purchase:

you’ll have to pay higher rates because you own 2 properties
you may be able to get a refund if you sell your previous main home within 36 months

There are special rules if you own property with someone else or already own a property outside England, Wales and Northern Ireland."

Neil Patterson

8:45 AM, 10th January 2017
About 2 years ago

Hi Nick,

I have found it in the original consultation >> https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

It looks like below you are paying the extra sorry.

Example 9:

N purchases her first property, which she will use as a buy-to-let. At the end of the day of the transaction she owns one property, so she will not pay the higher rates of SDLT, even though she is not using it as her main residence.

Two years later, N purchases a residential property which she will use as her main residence, but she decides to keep her buy-to-let property. In this instance, as she has two properties at the end of the day of the transaction and has not replaced a main residence (as she has not sold a previous main residence), the higher rates will apply.

Denise G

11:36 AM, 10th January 2017
About 2 years ago

heads they win, tails you lose

Amjed Khan

11:45 AM, 10th January 2017
About 2 years ago

Does property held in a Ltd company count? One would hope not as Ltd companies are separate legal entities!

Chris wood

11:41 AM, 11th January 2017
About 2 years ago

Hello Nick,
I am the similar situation to you as I am in the process of moving out of my own residence which I have sold and buying a new one. Once I stated I had buy to let properties then my solicitor gave me a form stating that the property I am purchasing would be my main residence and which I had to sign.
This is so I will only have to pay the normal amount of stamp duty on the property I am purchasing.
So far, it has been as simple as that.
It will be interesting to see what happens when I have extended and modernised this property and start renting it out. However, for the time being it will be my main residence !

Riz Raja

20:15 PM, 15th February 2017
About 2 years ago

Hi, could you share the solicitors you used as I am in exactly the same situation. Thanks

John Constant

19:11 PM, 16th February 2017
About 2 years ago

Reply to the comment left by "Amjed Khan" at "10/01/2017 - 11:45":

Amjed, this situation raised it's ugly head with me a couple of days ago. As a broker, I had not come across this situation before, and I can appreciate your argument. However, I decided to call a couple of lenders and posed hypothetical situations.
The general consensus of opinion was that because you will have given a Personal Guarantee to obtain your Ltd Co mortgage, that you would be eligible to pay the additional tax.
Sorry!

Paul Latham

23:04 PM, 7th June 2017
About 2 years ago

I currently own BTL and in the process of buying my first home to live in, I have never lived in my rentals and I am moving out of parents house and not selling any houses, if I sell a rental within 3 years can I claim the higher SDLT back or not as it will never have been somewhere I lived??

Neil Patterson

9:01 AM, 8th June 2017
About 2 years ago

Hi Paul,

I eventually found it >> https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

They only seem to like you replacing an actual main residence to get the refund.

"Example 28:

Q owns a buy-to-let property. He decides to purchase a new residential property, but does not sell his existing property. At the end of the day of the transaction he owns two residential properties and has not replaced his main residence, so he will pay the higher rates of SDLT.

5 months later Q sells his buy-to-let property. As this buy-to-let property was not his main residence, he has not replaced his main residence. Therefore, he will not be eligible for a refund."


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