Viable strategy for legally avoiding 3% stamp duty and CGT?Make Text Bigger
Firstly may I just say how helpful i’ve found this site and all the contributions from it’s members. It’s a hugely useful resource for a fairly inexperienced landlord like myself, and I’m very grateful for it’s existence!
I currently have BTL mortgages on 2 flats and a residential mortgage on my own home, all in the London area. I have no plans at present to expand my portfolio until I have a better idea of the impact of new legislation on the property market. I would however like to improve my cash flow and liquidity so that I’m in the strongest position possible.
My idea is to move out of my current home and into my lowest value, lowest yield BTL property, and then let my current home (assuming I can obtain permission from both TMW and Santander to do this).
Whilst living in my BTL i’d like to make improvements and add value to it, and then In 8 months time when my mortgage deals come to an end (roughly all at the same time) I’d like to sell the BTL as my primary residence, remortgage my resi onto a BTL to release equity, and then buy another property with the cash which I will then live in. I should also then be fortunate enough to have 100k or so left over for contingency.
I’ve calculated that this will improve my cash flow considerably as my current home has a higher rental value than the BTL, providing good income even once remortgaged at 75% LTV.
I’d be grateful if you’re able to advise on the following:
Will CGT be exempt on the BTL if i’ve lived there for 8 months? (I will have only owned it for 18 months as I ported the mortgage form a previous property).
Will the new cash purchase be exempt from the 3% second home stamp duty, as I will be replacing my existing PPR?
Does anyone know where The Mortgage Works stand on living in BTLs whilst making improvements?
My current home was bought 10 years ago for 170k and i now hope to borrow 300k. Will interest payments be tax deductible on the full 300k borrowed?
Apologies if this all sounds a bit extreme, but I feel this could set me up for the future and so i don’t mind a bit of upheaval while i’m still young(ish) free(ish) and single(ish). I also bought the BTL on the basis that I may one day live there. As a rule I never buy properties that I wouldn’t live in myself!
I’d be very grateful for any feedback on the above, or any advice if I’ve missed something here.
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