SDLT penalising landlords taking the plunge to move out from parents homes!

by Readers Question

11:45 AM, 8th June 2017
About A year ago

SDLT penalising landlords taking the plunge to move out from parents homes!

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SDLT penalising landlords taking the plunge to move out from parents homes!

After a lot of research I have unfortunately learned that the new SDLT rates with a 3% surcharge will apply to myself.

I am currently a landlord, but still living with parents.

I am in the process of buying my first main residential property however, as I am not selling any home ‘disposing’ and only moving out of parents house I am being hit with these higher rates.

The government is penalising people for moving out of parents homes! I have came to accept this, but what I am interested in is whether I was to sell my only BTL within 3 years could I claim the tax back or not as I have never technically lived at this property, but it was my only property?

Also in the future if I keep my BTL, but sell my new main residence that I am paying he tax on, and buy a new main residence, will I have to pay the higher rates again or will I be exempt as I am technically ‘replacing my main residence’ or is this relief only for a period of time?

Thanks

Paul



Comments

Neil Patterson

11:49 AM, 8th June 2017
About A year ago

Hi Paul,

I found the first scenario here >> 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.”

For part two of the question then yes you would not have to pay the extra stamp if the previous main residence was sold at the same time or a refund if sold later.

"Example 23:

G sold a property which was his main residence 3 months ago. He still owns another property which he lets out. Since the sale of his main residence he has lived in rented accommodation.

G then purchases a new residential property which he intends to use as a main residence.

At the end of the day of the transaction, he has two properties, but as he is replacing his main residence (he is purchasing a new main residence within 18 months of selling his previous main residence), the higher rates will not apply."

Paul Shears

19:34 PM, 8th June 2017
About A year ago

What is the situation if a landlord sells his main residence and then buys a new one offshore?
Thanks

David Price

7:23 AM, 9th June 2017
About A year ago

Why not buy a cheap property which is totally exempt from SDLT (below £40,000) which you can designate as your 'main residence'. Buy the property which you want and then sell your former 'main residence'.

Paul Shears

9:28 AM, 9th June 2017
About A year ago

Because I want to create something from scratch that will cost a lot more than £40K.
A good idea though. So thanks for the suggestion.

David Price

11:06 AM, 9th June 2017
About A year ago

Reply to the comment left by "Paul Shears" at "09/06/2017 - 09:28":

Looking at my initial post I do nto think I explained adequately. The £40k property is not for you to live in, it is merely so that you have a designated 'main residence' to sell and thus avoid the higher SDLT on your new property. There are plenty of sub £40k properties even in the expensive south east - not that you would want to live in any of them - but good for tax avoidance purposes.

Michael Barnes

16:18 PM, 9th June 2017
About A year ago

"After a lot of research I have unfortunately learned that the new SDLT rates with a 3% surcharge will apply to myself."

Just how much research does it take?

"The government is penalising people for moving out of parents homes!"

No!
It is penalising people for purchasing second and subsequent residential properties.
You are fortunate to be in the position of already owning one property and being able to buy a second.

David Price

16:42 PM, 9th June 2017
About A year ago

Michael I seem to remember reading somewhere on 118 that SDLT relief on main residence only applied if you sold your main residence within a certain time of buying a new main residence. Thus if you did not have a property to sell you could not claim relief unless of course you were a first time buyer.. Am I wrong?

Neil Patterson

18:09 PM, 9th June 2017
About A year ago

No correct David and it is 3 years

H B

7:38 AM, 10th June 2017
About A year ago

Reply to the comment left by "David Price" at "09/06/2017 - 11:06":

I think that if you buy properties and claim that you live there, but do not in reality and maintain the lie in order to get round paying tax, it is probably tax evasion rather than avoidance and so a criminal offence.

I think you should be careful about recommending this as a course of action.

Of course if he actually does live in it, then if course it would be fine as a tax avoidance measure.

Topaz Ko

9:56 AM, 29th November 2017
About 11 months ago

Hi, I have a similar question....

I lived in Property A up which was my main place of residence until May 2015. I then rented it out and changed my mortgage to buy-to-let in 2016. During that time I was away then came back and lived in rented accommodation. In Sept 2017 I closed a purchase on a residential property that I now live in and I paid 3% stamp duty.

If I sold Property A would I get that 3% back? If so how long would I have to sell property A, i.e. 3 years from May 2015 (when I rented it out) or 3 years from Sept 2017 (when I purchased my new main place of residence and thereby replacing Property A)?

I also own a third property which is rented out and always has been but not sure if this is relevant...

Thanks for any advice on the above!

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