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  • FIRST POST
    • robbay
    • By robbay 13th Oct 16, 5:03 PM
    • 4Posts
    • 1Thanks
    robbay
    Stamp Duty Help please
    • #1
    • 13th Oct 16, 5:03 PM
    Stamp Duty Help please 13th Oct 16 at 5:03 PM
    Hi,


    Currently own a house worth £140k with £90k equity and was planning on taking £45k equity out for deposit on a second house costing £300k which would be our main residence with our old house a BTL. We knew we would have to pay £5k Stamp duty and we can just about manage this but here in lies the problem. Financial Advisor says that is all the SD to pay, spoke to Solicitor who said we would have to pay more like £14k so we spoke to a second solicitor who says we should only have to pay £5k but we might have to pay £14k and get a refund from the tax man.


    As you can imagine this is all very stressful as we have had an offer accepted based on the FA advice and now this has come up.


    Any help gratefully received,


    Thanks,


    Rob
Page 1
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 13th Oct 16, 5:10 PM
    • 2,696 Posts
    • 2,964 Thanks
    Bluebirdman of Alcathays
    • #2
    • 13th Oct 16, 5:10 PM
    • #2
    • 13th Oct 16, 5:10 PM
    The SDLT you will pay is undoubtedly £14k. You will only get a refund of £9k if you sell house 1 within 3 years of buying house 2.
    • anselld
    • By anselld 13th Oct 16, 5:11 PM
    • 4,869 Posts
    • 4,319 Thanks
    anselld
    • #3
    • 13th Oct 16, 5:11 PM
    • #3
    • 13th Oct 16, 5:11 PM
    You have to pay £14k SDLT as you are buying a second home.
    If you sell the old home within 3 years you will get the surcharge refunded (£9k).
    • AnotherJoe
    • By AnotherJoe 13th Oct 16, 5:25 PM
    • 4,148 Posts
    • 4,175 Thanks
    AnotherJoe
    • #4
    • 13th Oct 16, 5:25 PM
    • #4
    • 13th Oct 16, 5:25 PM
    Get a new FA, the current one knows sweet FA and I wonder what else he is misadvising you about?

    And you only get the refund if you sell the BTL within 3 years (as stated by other posters) not as a matter of course as the second solicitor indicates (or you imply)

    With such a slapdash approach to the whole thing, and being on the edge with costs, are you aware what is involved being a landlord? The financial implications? The risks? The costs? The legal requirements?
    • robbay
    • By robbay 13th Oct 16, 5:56 PM
    • 4 Posts
    • 1 Thanks
    robbay
    • #5
    • 13th Oct 16, 5:56 PM
    • #5
    • 13th Oct 16, 5:56 PM
    Thank you all for your advice. In response to AnotherJoe the second solicitor said we should be ok but might have to claim it back and nothing was implied by me. Also not sure about the slapdash bit as a lot of thought has gone in to this decision including seeking expert advice.
    • Thrugelmir
    • By Thrugelmir 13th Oct 16, 6:05 PM
    • 51,268 Posts
    • 43,067 Thanks
    Thrugelmir
    • #6
    • 13th Oct 16, 6:05 PM
    • #6
    • 13th Oct 16, 6:05 PM
    Currently own a house worth £140k with £90k equity and was planning on taking £45k equity out for deposit on a second house costing £300k which would be our main residence with our old house a BTL.
    Originally posted by robbay
    Will you incomes pass the affordability criteria to support a mortgage debt of £350k?
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Pixie5740
    • By Pixie5740 13th Oct 16, 6:07 PM
    • 8,861 Posts
    • 11,880 Thanks
    Pixie5740
    • #7
    • 13th Oct 16, 6:07 PM
    • #7
    • 13th Oct 16, 6:07 PM
    The additional SDLT for purchasing additional residential properties has been discussed numberous times on the forum before on a near daily basis.

    The higher rate SDLT is given on the .gov.uk website: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

    HMRC produced this guidance note:
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf

    So it's quite worrying that your FA and a solicitor are giving you duff advice.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • AnotherJoe
    • By AnotherJoe 13th Oct 16, 7:30 PM
    • 4,148 Posts
    • 4,175 Thanks
    AnotherJoe
    • #8
    • 13th Oct 16, 7:30 PM
    • #8
    • 13th Oct 16, 7:30 PM
    Thank you all for your advice. In response to AnotherJoe the second solicitor said we should be ok but might have to claim it back and nothing was implied by me. Also not sure about the slapdash bit as a lot of thought has gone in to this decision including seeking expert advice.
    Originally posted by robbay
    Then unless you told the second solicitor you were planning to keep your BTL for only a couple of years or so and certainly sell before three had passed, they had no grounds at all to say you could claim it back. None, zero nada, nil.

    You also are admittedly stretched to the limit ( cannot afford the extra £9k) yet there will be many costs involved in having a BTL. How much buffer do you have set aside to pay for those?

    And you've somehow found both a solicitor and an IFA who don't understand the most basic facts of stamp duty amd have given you wholly misleading information upon which your financial plans have seemingly been based.

    I stand by slapdash.
    • robbay
    • By robbay 14th Oct 16, 12:41 PM
    • 4 Posts
    • 1 Thanks
    robbay
    • #9
    • 14th Oct 16, 12:41 PM
    • #9
    • 14th Oct 16, 12:41 PM
    Update: The solicitor who claims we can pay the money back has sent an email stating:


    With regard to the tax (Stamp Duty) I confirm as discussed that as from 1st April this year the Inland Revenue charge an additional 3% for a second property although this is not applicable to a main residence


    In your case I note instructions that you will be letting your current property and the new property will be your main residence


    The additional duty should not therefore be payable


    However the IR will often require the additional duty to be paid and then require you to produce evidence to reclaim the payment after completion


    If instructed I will liaise with the IR and check their requirements


    Please advise as after reading about this I think he is wrong.


    Thanks,


    Rob
    • p00hsticks
    • By p00hsticks 14th Oct 16, 12:46 PM
    • 4,922 Posts
    • 4,323 Thanks
    p00hsticks
    Please advise as after reading about this I think he is wrong.
    Originally posted by robbay
    He's wrong. If you are purchasing a second or subsequent property you are only exempt from paying the higher SDLT if you are REPLACING your main residence - i.e. you are selling the house you currently live in and intend to live full time in the house you are purchasing.

    You could point him to the government website here to support this (although why you should need to when he's supposed to be the 'expert' is another matter ....)

    https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

    (N.B. We're all assuming that you live in England or Wales)
    Last edited by p00hsticks; 14-10-2016 at 12:51 PM.
    • Pixie5740
    • By Pixie5740 14th Oct 16, 12:49 PM
    • 8,861 Posts
    • 11,880 Thanks
    Pixie5740
    The solicitor is wrong and why is he referring to HMRC as IR? The Inland Revenue dissolved in April 2005! He sounds out of touch. Email him the links I gave you and tell the solicitor to read them.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • HappyHarry
    • By HappyHarry 14th Oct 16, 12:50 PM
    • 215 Posts
    • 206 Thanks
    HappyHarry
    Update: The solicitor who claims we can pay the money back has sent an email stating:


    With regard to the tax (Stamp Duty) I confirm as discussed that as from 1st April this year the Inland Revenue charge an additional 3% for a second property although this is not applicable to a main residence


    In your case I note instructions that you will be letting your current property and the new property will be your main residence


    The additional duty should not therefore be payable


    However the IR will often require the additional duty to be paid and then require you to produce evidence to reclaim the payment after completion


    If instructed I will liaise with the IR and check their requirements


    Please advise as after reading about this I think he is wrong.


    Thanks,


    Rob
    Originally posted by robbay
    Your solicitor is wrong.

    See Question 1 on page 24 of the HMRC guidance notes, which mirrors your situation:

    Q1. I am purchasing a new main residence but intend to retain my current main residence, convert it to a buy-to-let mortgage and rent it out. Will I have to pay the higher rates of SDLT on the purchase of my new main residence?
    A1. Yes, the higher rates will apply as following the purchase you will own an additional residential property. However, if you sell your previous home within 3 years of the purchase of the new one you will be able to claim a refund from HMRC

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 14th Oct 16, 1:12 PM
    • 2,696 Posts
    • 2,964 Thanks
    Bluebirdman of Alcathays
    Your solicitor is very wrong, and I would be a little perturbed by the sheer volume of mistakes in that email. It sounds like they are making it up as they go along, never a good characteristic in someone you are paying £xxx for qualified advice. Get rid.
    • GipsyHillClimber
    • By GipsyHillClimber 14th Oct 16, 1:45 PM
    • 10 Posts
    • 8 Thanks
    GipsyHillClimber
    I would agree with the rest of the posters, your solicitor obviously does not understand the changes and therefore alarm bells should be ringing as it's not the most difficult of concepts and was all over the news for about 3 months earlier this year. As others have said, get rid or you'll end up regretting it.

    As an aside i would also question how wise it is to keep your old property if you're stretching yourself to buy the new one (i'm only assuming you're stretching based on the comment about just about being able to afford the 5k SDLT.) BTL properties can sometimes suck up your money for the first few months of getting all the required elements set up (gas safety checks, landlord insurance etc.). It may just be worth running all the numbers properly with a competent FA so you don't get yourself in hot water.
    • richard2511
    • By richard2511 14th Oct 16, 1:51 PM
    • 42 Posts
    • 28 Thanks
    richard2511
    Wow... that solicitor should be avoided at all costs!
    • csgohan4
    • By csgohan4 14th Oct 16, 1:52 PM
    • 2,563 Posts
    • 1,583 Thanks
    csgohan4
    Your solicitor basically wants your business and wasting your time and money for them to come round and say no you can't claim back your SDLT.
    • Cakeguts
    • By Cakeguts 14th Oct 16, 6:35 PM
    • 930 Posts
    • 1,133 Thanks
    Cakeguts
    You have to pay the extra 3% stamp duty when you buy a second property. It doesn't matter if the second property is a main residence or a buy to let if you intend to own two properties you will have to pay the extra stamp duty. You will only get a refund of the extra stamp duty if you sell one of the properties and so then only own one property within the time limit for refund of stamp duty.
    • kinger101
    • By kinger101 14th Oct 16, 7:26 PM
    • 3,022 Posts
    • 4,260 Thanks
    kinger101
    Update: The solicitor who claims we can pay the money back has sent an email stating:


    With regard to the tax (Stamp Duty) I confirm as discussed that as from 1st April this year the Inland Revenue charge an additional 3% for a second property although this is not applicable to a main residence


    In your case I note instructions that you will be letting your current property and the new property will be your main residence


    The additional duty should not therefore be payable


    However the IR will often require the additional duty to be paid and then require you to produce evidence to reclaim the payment after completion


    If instructed I will liaise with the IR and check their requirements


    Please advise as after reading about this I think he is wrong.


    Thanks,


    Rob
    Originally posted by robbay
    Run away from this solicitor. They are an absolute moron if they cannot correctly interpret a plainly written law that has number example scenarios, and has been widely publicized.
    • bigfreddiel
    • By bigfreddiel 14th Oct 16, 10:55 PM
    • 4,072 Posts
    • 1,865 Thanks
    bigfreddiel
    Hi,


    Currently own a house worth £140k with £90k equity and was planning on taking £45k equity out for deposit on a second house costing £300k which would be our main residence with our old house a BTL. We knew we would have to pay £5k Stamp duty and we can just about manage this but here in lies the problem. Financial Advisor says that is all the SD to pay, spoke to Solicitor who said we would have to pay more like £14k so we spoke to a second solicitor who says we should only have to pay £5k but we might have to pay £14k and get a refund from the tax man.


    As you can imagine this is all very stressful as we have had an offer accepted based on the FA advice and now this has come up.


    Any help gratefully received,


    Thanks,


    Rob
    Originally posted by robbay
    I thought FAs where all highly qualified and regulated, or is that IFAs? Maybe you should have paid an IFA?

    Cheers fj
    • x-caitlin-x
    • By x-caitlin-x 14th Oct 16, 11:13 PM
    • 165 Posts
    • 154 Thanks
    x-caitlin-x
    The solicitor is wrong and why is he referring to HMRC as IR? The Inland Revenue dissolved in April 2005! He sounds out of touch. Email him the links I gave you and tell the solicitor to read them.
    Originally posted by Pixie5740
    This was my first thought as well! I don't know anyone who still refers to the inland revenue. I'd get rid of that solicitor ASAP and find someone who knows what they're talking about. I'd be tempted to put in a complaint if it was me. Who knows how many other people they've given this wrong advice to?
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