PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Property Lawyer - Main Residence & SDLT

Options
laurendan
laurendan Posts: 6 Forumite
in House buying, renting & selling
Hello all,

I am new to these forums and am looking for some advice regarding SDLT.

1) We currently have 3 BTL properties but do not have a main residence and have never owned a main residence in the UK due to previously working overseas.
2) We are now living back in the UK and want to buy our main residence.
3) Due to the fact we will have more than one property at the end of the transaction and we are not replacing a main residence my understanding is that we are liable for the higher rate of SDLT which in this case is a significant amount on a £650 property.
4) What we are therefore considering is purchasing a lower value main residence (e.g. 200k) paying the higher rate SDLT on a lower value house and then selling again to buy a higher value (£650k) property which will be at the lower SDLT - not ideal but have calculated saving circa £18k

I am looking for Legal advice regarding point 4 to understand how long i would need to 'own' and 'live' in the £200k house for this to be classed as a main residence.

Can anyone advise on a property lawyer to contact?

Thank you in advance!

Comments

  • kinger101
    kinger101 Posts: 6,282 Forumite
    First Anniversary Name Dropper First Post
    Options
    There is some case law (for CGT) relating to the definition of "residence", which are likely also relevant for SDLT. It means your scheme won't work.

    Residence isn't defined by the length of tenure, but the quality. So a house you never intend to make your home with any degree of permanence, that is likely too small for your needs, isn't a residence.


    One of the cases here.

    https://www.bloomsburytaxonline.com/private-residence-disposal-cgt-or-trading-income/
    "Real knowledge is to know the extent of one's ignorance" - Confucius
  • G_M
    G_M Posts: 51,977 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    laurendan wrote: »
    Can anyone advise on a property lawyer to contact?
    Since it would make sense to see a lawyr near where you live or work, we'd neeed to know yyour location!

    Failnig that, search the soliitor's register.
  • laurendan
    laurendan Posts: 6 Forumite
    Options
    G_M

    thank you - we are in south manchester..
  • G_M
    G_M Posts: 51,977 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    laurendan wrote: »
    G_M

    thank you - we are in south manchester..
    I'm not.

    So can only suggest:

    http://solicitors.lawsociety.org.uk/about
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    Options
    as mentioned above, case law has established that the overriding principle for test of main residence is "degree of permanence, continuity or expectation of continuity"

    whilst true that time served is not the deciding factor, it is of course still very relevant. So in your context of (apparently) currently not having a home at all (so where do you live at the moment? rented? house abroad?) the base test is Goodwin v Curtis
    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64460

    that was occupied for only tens of days so was always a bit shaky, however, the same principle was used in Moore v HMRC and some 9 months of occupation was overturned as still being irrelevant to the circumstances that it was not a main residence as a second property was available at the same time.
    http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02827.html

    In your case therefore, as you will de facto have only 1 property that you can live in (I'll assume you will make sure the 3 BTL remain let!) it is possible you will be able to show your main residence was your main residence for the period you occupied it, but that really should be a "decent" length of time, better measured in years, not months but bear in mind that purchasing with an intent to sell and trade up negates any argument of it having continuity..
    https://www.taxinsider.co.uk/1222-Private_Residence_Relief_Is_It_A_Residence.html


    as ever, take professional advice
  • SDLT_Geek
    SDLT_Geek Posts: 2,496 Forumite
    First Anniversary First Post Name Dropper
    Options
    After some lobbying, HMRC have included this explanation in their guidance on the 3% surcharge, now published in their manual here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812


    "Merely occupying a property will not in itself make it a main residence. There needs to be a permanence and expectation of continuation to the occupation to establish it as a main residence."
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards