Stamp duty – I do object paying tax that I am not obliged to?

Stamp duty – I do object paying tax that I am not obliged to?

10:54 AM, 7th December 2020, About 8 months ago 11

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Can anyone help me out with a Stamp Duty question? I have spoken to mortgage advisors, solicitors and the HMRC and seem to get a different answer every time. Obviously, no one likes paying extra taxes, but it just seems so bloody complicated and I do object paying tax that I am not obliged to.

Here are two scenarios I am currently facing. Any suggestions would be appreciated.

Scenario 1
I own one residential property (my primary residence).
I subsequently purchase two rental properties (cost 290 and 330K) and pay 3% additional stamp duty on each property.
If I then sell my primary residential property within 3 years of buying rental properties (and not buying another residential property at that moment in time) would I be eligible to claim a refund of the additional 3% stamp duty on one of the rental properties (the higher cost one?).

Scenario 2
I rent out my one residential property.
I subsequently purchase two rental properties (and pay the additional 3% stamp duty on each).
I then buy another residential property and within three years I then sell my original residential property (which has been rented out).
Can I claim a refund on any of the proprieties that I have paid the additional 3% stamp duty on?

Thanks

Jon



Comments

by Neil Patterson

10:59 AM, 7th December 2020, About 8 months ago

Hi Jon,

Scenario 1: No refund as you must be replacing a main residence with a new main residence.

Scenario 2: I am less sure, but I think you would struggle to get a refund.

by jonbaylis@yahoo.com

12:25 PM, 7th December 2020, About 8 months ago

ok.... to confuse matters even more, what would happen if the rental properties used in my original question were designated as additional residential properties (I always thought the additional stamp duty was based on number of properties rather than their designation, i.e., residential or rental).

by silversurfer2017

12:28 PM, 7th December 2020, About 8 months ago

Hi Jon
IMO the answers to your queries are as follows:
Scenario 1
You would only be able to claim the 3% back on one of the BTL properties if you moved into it yourself, paid council tax bills, utilities etc for a reasonable period of time, perhaps 6 months plus, and actually making this property your new replacement main residence.
Scenario 2
This would fail because you are trying to reverse what is a more normal transaction. A more normal transaction is what I am currently doing myself. I am downsizing and we have already purchased our new home. We are renting it out for 18 months then we are selling our present main residence (+ lots of furniture!) and then moving into our smaller house and claiming the 3% SDLT back. What you are doing is trying to twist the legislation. When you rent out your home it ceases be you main residence. It would be OK if you were still living there and just renting out a room.

by silversurfer2017

12:58 PM, 7th December 2020, About 8 months ago

Reply to the comment left by at 07/12/2020 - 12:25
The rules are quite straightforward. You can only own and live in one property at any one time and this property is regarded by HMRC as you main primary residence. Any other properties you buy attract an extra 3% SDLT whether you use these as BTL's, holiday homes or even benevolently as rent free accommodation for aged relatives or even homeless people

by Jerry Stone

13:01 PM, 7th December 2020, About 8 months ago

Sylvie.Snowling@PropertyPositive.com

Sylvie is a Stamp Duty expert.

She deals with H.M.R.C. overpayments.

by Marlena Topple

19:05 PM, 7th December 2020, About 8 months ago

My understanding is if you move from a residential property into a rental property and then onto a residential property you are not eligible for the 3% stamp duty refund.

by NEIL T

19:47 PM, 7th December 2020, About 8 months ago

Reply to the comment left by Marlena Topple at 07/12/2020 - 19:05
So I'm currently buying a new property to live in, but there is a years work to do before it's to my liking. So the plan is to plot up in my vacant rental property until the work is done. If the case is that I cannot get a refund after the sale of my current home then I'll have to move in to a semi derelict house?

by Marlena Topple

19:50 PM, 7th December 2020, About 8 months ago

Reply to the comment left by neilt at 07/12/2020 - 19:47
Please do take advice to check this out property. I got my information from an article in an online financial web site.

by silversurfer2017

20:04 PM, 7th December 2020, About 8 months ago

Reply to the comment left by Marlena Topple at 07/12/2020 - 19:05
Hi Marlena. Lot of unnecessary confusion here. If you move from a residential property which you own or buying on a mortgage into a rental property and then at a later date move out to buy your own residential property you will be in the same position as a first time buyer from a SDLT point of view. You will not have to worry about claiming back the extra 3% SDLT because you will not be paying it in the fist place. You will be buying your new main residential property and so will not be buying a second home or a BTL property.

by silversurfer2017

20:08 PM, 7th December 2020, About 8 months ago

Reply to the comment left by neilt at 07/12/2020 - 19:47
Hi Neil, If you get the work done on your new house and sell your existing house within 3 years of the purchase of your new house then you can claim back the 3% SDLT. So worth moving into your new house within the 3 years even it is not quite finished.

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