Will I be affected by the new stamp duty changes?

by Readers Question

10:03 AM, 4th February 2016
About 3 years ago

Will I be affected by the new stamp duty changes?

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Will I be affected by the new stamp duty changes?

I currently live in a three bedroom house that I have a normal residential mortgage on. It has been my only residence since 2010. Will I be affected by the new stamp duty changes

However, due to changes in circumstances, I will be living on my own and no longer be needing the extra space within a couple of months.

One option I had in mind was to remortgage into a buy-to-let mortgage and move myself into a second residence which would be a much smaller one-bedroom rented apartment.

If I could get a half decent rate, I should be end up having enough money left over from rental income each month to subsidise my new rent in the one-bedroom apartment I move into (even after factoring in changes to how buy-to-let mortgages will be taxed).

My question is whether if I take this step after April, is there any way the stamp duty increase on purchases of a second residence might affect me?

Of course, there will be no new property purchase in my scenario. But would changing my current primary residence into a secondary residence post-April mean I have to make up the additional stamp duty charges buy-to-let’s will incur compared to the much lower rates I initially paid when I bought the property?

Basically, how are properties that were purchased before April 2016, but become second residences after that date, taxed for the purpose of stamp duty?

Thanks

Adam



Comments

Mark Alexander

10:05 AM, 4th February 2016
About 3 years ago

Hi Adam

Stamp Duty is only payable when you buy a property.

Based on what you have said, you will not be affected.
.

Mike W

12:29 PM, 4th February 2016
About 3 years ago

Adam,

As Mark has said, since you would not own two properties then you are not affected by the stamp duty change. If you bought the second property, after the stamp duty change then you would be affected.
I wonder how it will be policed. How will dishonest people be traced?
If you had a friend who bought their first house they would not be affected. Your friend might (subject to mortgage company approval) 'rent a room' to you. That is a comparable situation to what you are proposing.
You may want to discuss getting permission to rent your home rather than getting a formal 'buy to let' mortgage. Owner occupier terms are usually better than BTL mortgage terms. Many home owners have jobs which require them to move around with their work. It is sometimes not economic or not affordable to sell and buy somewhere else. So they rent out their existing home and rent another property for themselves in the new work location. Of course they may be hit by despicable George's tax changes to finance costs. A typical 'unintended consequence to work mobility', that despicable George did not think about.

Adam Davies

14:49 PM, 8th February 2016
About 3 years ago

As both have said, you will not be affected, however, even if you did purchase the new property, as I understand it you will still not be affected as you are replacing your main residence.

As long as your are replacing your main residence, it doesn't matter how many BTL's you have.


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