SDLT when moving from rented into own home as a Landlord owning BTLs?

by Readers Question

8:50 AM, 29th March 2017
About 2 years ago

SDLT when moving from rented into own home as a Landlord owning BTLs?

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SDLT when moving from rented into own home as a Landlord owning BTLs?

I am a landlord myself and am selling my own Principal Private Residence home to move into rented for approx 2 years.

I understand the extra 3% SDLT may play a part if I stay in rented this long and then wish to buy another PPR property to move into.

Should I move into one of my own rentals or rent from another landlord?

As I am looking at purchasing (after 2 yrs) a property of some value £ 900k-1m the 3% extra SDLT is very considerable and I need to decide what route to take with view to this in the future.

Please advise

Janet



Comments

Neil Patterson

9:03 AM, 29th March 2017
About 2 years ago

From the Stamp Duty 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

"If the purchaser has sold a previous main residence within 18 months before the day of the transaction and the transaction is a purchase of a new main residence, the purchaser will be considered to be replacing a main residence. Where an individual is replacing a main residence the higher rates of SDLT will not apply."

From the now official .Gov web site reference >> https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

"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"

Please note that in the original consultation document the time scales for a refund if you sold your main residence and replaced it before or after the purchase was 18 months and it is now 36 months.

Now the final .Gov rules confirm you can get a refund of the surcharge if you sell your original main residence up to 36 months after, BUT they no longer mention what happens if you sold before and are replacing. I would therefore personal want to get the rules on this verified with HMRC directly or your accountant if they have already run across this scenario.

12:27 PM, 29th March 2017
About 2 years ago

The 36 months rule also applies if you have already sold your main residence and providing that you buy your next main residence within 3 years of the selling, then the higher rate of SDLT will not apply

Simon Bentley

13:27 PM, 29th March 2017
About 2 years ago

You could buy a cheap property up north to use as your ppr and then sell it prior to or even post your big purchase to ensure continuity of ppr, such a property could cost less that the SDLT it would potentially save you and you should get all or at the very least most of that cost back, you might even see a return on it - exempt from CGT of course as its your PPR.

J lied03

9:41 AM, 30th March 2017
About 2 years ago

Reply to the comment left by "Simon Bentley" at "29/03/2017 - 13:27":

Good idea Simon but properties up north for £27-30k? Just get a garage in Cornwall for that.
Don't I have to declare the rental I'm living in as my PPR?

Simon Bentley

15:12 PM, 30th March 2017
About 2 years ago

"properties up north for £27-30k?" - how many do you want?

J lied03

1:22 AM, 31st March 2017
About 2 years ago

Reply to the comment left by "Rosie Semaj" at "29/03/2017 - 12:27":

Thanks are you 100% sure about that as I will be renting for 2 yrs?
Does it make any difference to live in my own rental or someone else's? Only I read somewhere if I move into my own rental and declare as my PPR I will have to pay 3% extra sdlt when buying a new PPR to move into unless I sell my rental. I don't want to sell it, so should I rent off someone else?

J lied03

1:25 AM, 31st March 2017
About 2 years ago

Reply to the comment left by "Simon Bentley" at "30/03/2017 - 15:12":

Seriously are they abundant? Where? Would I need to live there if declaring as my PPR??

8:09 AM, 31st March 2017
About 2 years ago

Reply to the comment left by "J lied03" at "31/03/2017 - 01:22":

Yes 100% sure, I am a chartered tax advisor and chartered accountant. However, if you move into your own rental that will become your new PPR and thus you would have to pay the 3% surcharge when you buy your next home. Therefore, you would be better off renting off someone else.

J lied03

10:03 AM, 31st March 2017
About 2 years ago

Thanks Rosie, either way I pay out around £25-27k whether sdlt or rent over that period. Guess only way to avoid is if we move into our own rental then sell it when we wish to move out again.
Simon mentioned buying a small cheap home up north and declaring as our PPR - could we do that while living elsewhere to keep continuing PPR ? Then selling when we come to buy our permanent PPR?

10:15 AM, 31st March 2017
About 2 years ago

You could, however, if you rent it out, you can not claim it as your PPR. You can only claim a property that you have available to you as a residence for PPR. If there is a tenant in it, then the property is not available to you.

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