9:35 AM, 9th March 2016, About 5 years ago 18
Dear Mrs H…
The Government has recently consulted on the higher rates of stamp duty land tax for purchases of additional residential property. The consultation can be found at 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 and contains examples of how the higher rates apply in different cases, which you should find useful. The Government is now carefully analysing the consultation responses received. The final policy design will be confirmed by the Government at Budget on 16 March 2016, before the new rules come into effect on 1 April this year.
In the circumstances you describe the proposal is that the higher rates will apply as following the purchase you will own more than one residential property and will not have replaced a main residence. i.e. sold a current main residence (that you own) at the same time as buying a new one. As you are renting your current main residence and do not own it the replacement rules will not apply – see section 2.2, 2.4 and 2.8 of the consultation document for further details. There are special provisions if the new main residence is purchased with 18 months of the sale of the old one but unfortunately under the proposals these will not apply because you sold your old main residence 6 years ago.
Stamp Taxes Policy & Technical Team
This is my original email to firstname.lastname@example.org
Dear sir or madam,
Please could you help with an enquiry that we have regarding how much stamp duty we will pay if we purchase our own home.
HMRC gave us this email and said we should ask you for advice.
Our situation is complicated and none of the current published documentation or examples covers our situation so we need clear guidance before we proceed with the sale as we can’t afford to buy if an additional 3% is added.
My husband and I are property investors!
We own 17 small ex local authority buy to let houses that we purchased over the last 10 years.
We have never lived in any of them, they were always purchased as buy to let and all have buy to let mortgages on them. They are in a different area to where we live now and used to live.
With regards to our own property, we owned our own residential property 6 years ago in Solihull, but due to a forced relocation with work we moved 125 miles away to Merseyside and moved into a rented property. We sold our residential property at the time so do not have one to ‘sell’ anymore.
We chose not to buy again immediately as I needed to be flexible with work as there were further possibilities of relocations.
After 6 years of renting and I now have a new job, we feel secure so have decided to buy the rented house we currently live in.
The owner investor needs to sell because of the new tax changes to landlords.
Unfortunately it is likely that we will be completing after the April deadline.
All of the current published documentation does not give clear guidance on our situation.
We assumed that although we had other BTL properties, as this is our only residential property we wouldn’t incur the additional 3% but in the diagram this is only the case if we are selling our old property, which we have already done.
There is no mention of current property investors who rent then buy their own home.
However there is talk of people moving out of their own home into rented, renting that out then buying again which is not what we have done.
We have 2 small children settled in the school locally so we don’t want to have to move away.
But if we have to pay the 3% extra we can’t afford to buy this house and the landlord will sell to somebody else making us homeless.
We understand that these changes are there to help people purchase their homes which we are so we really hope this is a positive outcome for us.
Please can you confirm if we will be exempt from the additional 3% as this is our only residential property and we have already sold our last residential one before moving into this house and renting it 6 years ago. All of our deeds, council tax and mortgage information will show this.
We really look forward to hearing from you
Editors Note: Stamp duty diagram below
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