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Stamp Duty -hidden dangers of owning a buy lot let

Joff_Campbell
Joff_Campbell Posts: 2 Newbie
in House buying, renting & selling
I currently do not own a main residence as I rent the house I live in following my divorce own but own a buy to let flat.

I wish to buy a main residence with my girlfriend but the tax man says I have to pay the 3% surcharge as I will have two properties.

He also advised that anyone who wishes to move to a new main residence (selling the old one ) will have to pay the 3% surcharge if they own a second property!!
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  • rtho782
    rtho782 Posts: 1,189 Forumite
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    Joff_Campbell wrote: »
    I currently do not own a main residence as I rent the house I live in following my divorce own but own a buy to let flat.

    I wish to buy a main residence with my girlfriend but the tax man says I have to pay the 3% surcharge as I will have two properties.
    Yes, that's kind of the point. Sell your BTL if you don't want to pay.

    He also advised that anyone who wishes to move to a new main residence (selling the old one ) will have to pay the 3% surcharge if they own a second property!!Have to pay it initially,
    but can claim it back if you sell your old main residence within 18 months.

    Is there a question here or are you just stating the law for our info?
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    Government introduces a higher rate of SDLT for the purchase of additional residential properties. In other news bears !!!! in the woods and the Pope is a Catholic.
    Joff_Campbell wrote: »
    I currently do not own a main residence as I rent the house I live in following my divorce own but own a buy to let flat.

    I wish to buy a main residence with my girlfriend but the tax man says I have to pay the 3% surcharge as I will have two properties.

    He also advised that anyone who wishes to move to a new main residence (selling the old one ) will have to pay the 3% surcharge if they own a second property!!

    Who is this tax man you speak of because you appear to have been poorly advised? Rather spending time being outraged have you actually taken the time to read the guidance note for the higher rate of SDLT?
  • Lysimache
    Lysimache Posts: 192 Forumite
    First Anniversary First Post Combo Breaker I've helped Parliament
    edited 28 November 2017 at 2:30PM
    I think what is outraging the poster is that if he had a primary home in the first place to live in, and was replacing that, he wouldn't pay the extra tax. However, if he rents a primary home, has a BTL as the second home, and buys a home to replace the primary home, he does pay the extra tax.

    Ironically, it discriminates against people who didn't own two homes already with one as their residential place -- while hurting those who owns one home already for BTL but it isn't their primary residence.

    As someone with two homes who is just swapping one out for another wouldn't be hit, but someone with one home acquiring another home to live in would.
  • rtho782
    rtho782 Posts: 1,189 Forumite
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    If the OP is this clueless about the law, I feel sorry for his tenants. Do we need to go through the list of "have you protected their deposit, gotten gas safe cert" etc?
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    Yes you will be liable to pay the extra stamp duty as you are increasing the number of properties you own. That has been the case for a while and it was well publicised in the period between it becoming announced and coming into play this April.

    The media was full of commentary about people bringing forward property transactions to beat the charge coming in and the effect on the market - there were also other measures hitting the headlines when announced, e.g. limiting tax relief on BTL mortgage interest etc which has potential to change the demand from individual residential landlords.

    He also advised that anyone who wishes to move to a new main residence (selling the old one ) will have to pay the 3% surcharge if they own a second property!!
    At present if you simply change your main residence property by selling it and buying another within the defined timescales, you can get relief/refund from the premium extra stamp on the new main residence. That relief won't last forever.

    However if you buy a replacement BTL there is no relief and if you increase your number of properties (by buying an extra BTL, or by buying a new main residence when you currently own residential property but didn't previously own a main residence in your case), you pay the extra 3% on the value bought.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    Lysimache wrote: »
    I think what is outraging the poster is that if he had a primary home in the first place replacing and was replacing that, he wouldn't pay the extra tax. However, if he rents the primary home and buys a home to replace that, he does pay the extra tax.

    Maybe the poster has no reason to be outraged. Maybe he should read the guidance note to find out.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    bowlhead99 wrote: »
    Yes you will be liable to pay the extra stamp duty as you are increasing the number of properties you own. That has been the case for a while and it was well publicised in the period between it becoming announced and coming into play this April.

    Not necessarily. The OP hasn't given enough information to say whether the higher rate will apply or not.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    Lysimache wrote: »
    I think what is outraging the poster is that if he had a primary home in the first place to live in, and was replacing that, he wouldn't pay the extra tax. However, if he rents a primary home, has a BTL as the second home, and buys a home to replace the primary home, he does pay the extra tax. but the whole point is you are not replacing anything as your "home" is rented and so not being replaced.
    You are buying an additional property - which is precisely why the tax was introduced, to penalise those able to INCREASE the absolute number of properties they own, not rent.

    Ironically, it discriminates against people who didn't own two homes already with one as their residential place -- while hurting those who owns one home already for BTL but it isn't their primary residence. as above, it "hurts" those rich enough to increase their property portfolio
    Lysimache wrote: »
    As someone with two homes who is just swapping one out for another wouldn't be hit, but someone with one home acquiring another home to live in would.
    indeed, that is an outrageous concession given to those who are money grubbing LL who can still own a home whilst at the same time retaining their income from their poor tenant. The law should have made it impossible to own more than one property at any one time. That would be "fairest" :D
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    Pixie5740 wrote: »
    Not necessarily. The OP hasn't given enough information to say whether the higher rate will apply or not.

    Well, he had presumably given the relevant information about his specific circumstances to "the tax man" who told him that the higher rate would apply.

    So, I assume it does apply otherwise he wouldn't be posting that it does. Obviously, you're right that he should check the rules for himself and following the link or googling it will be useful.

    However, he's posting here that it is some "hidden danger" ; the reality is that it is not hidden at all - the soundbite headlines were well publicised, and the full letter of the law is available online in addition to relevant guidance notes (not just from govt agencies but various law firms summarising the impact on various scenarios.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    bowlhead99 wrote: »
    Well, he had presumably given the relevant information about his specific circumstances to "the tax man" who told him that the higher rate would apply.

    Would that be the same tax man who allegedly gave the OP this little gem.....
    Joff_Campbell wrote: »
    He also advised that anyone who wishes to move to a new main residence (selling the old one ) will have to pay the 3% surcharge if they own a second property!!
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