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  • FIRST POST
    • Moderatelymod2
    • By Moderatelymod2 12th Jun 17, 7:32 PM
    • 3Posts
    • 0Thanks
    Moderatelymod2
    Avoid higher rate stamp duty on 2nd property
    • #1
    • 12th Jun 17, 7:32 PM
    Avoid higher rate stamp duty on 2nd property 12th Jun 17 at 7:32 PM
    Hi all, can anyone advise if we are liable for or can avoid the higher rate of stamp duty on a 2nd property, if the facts are:

    Property 1
    I have a mortgaged with a friend - purchased approx 10 years ago.
    This property has not been my residence for 4 years.
    We would sell it but it is in a lot of negative equity.
    It is now let out.

    Property 2
    My fianc! (a different person than property 1) and I are now buying a property which will be our sole residence.
    She is a first time buyer, obviously I am not.

    Also, would the outcome be any different if we were married before the sale was complete?

    I have become an unwilling landlord due to economic downturn. It seems very unfair that I am penalised yet again when buying what will be my marital home and only residence.

    I would be very grateful if someone can advise or speak from a similar experience.
Page 1
    • lovinituk
    • By lovinituk 12th Jun 17, 7:38 PM
    • 5,371 Posts
    • 6,037 Thanks
    lovinituk
    • #2
    • 12th Jun 17, 7:38 PM
    • #2
    • 12th Jun 17, 7:38 PM
    From my understanding you won't be able to avoid it even if you do sell the other property.

    The only chance would be if you lived in the other property for a time and then sold it as your main residence. I have no idea how long you would need to live there for though to make it valid.

    Or if she buys the new property in her name only which you would get away with as you are not married.
    Last edited by lovinituk; 12-06-2017 at 7:42 PM.
    • Alter ego
    • By Alter ego 12th Jun 17, 7:39 PM
    • 2,068 Posts
    • 1,985 Thanks
    Alter ego
    • #3
    • 12th Jun 17, 7:39 PM
    • #3
    • 12th Jun 17, 7:39 PM
    Buy the house in fiance's name. But difficult if you live in it without your name on the paperwork.
    Ignore me if you like, it's not the real me anyway.
    • Pixie5740
    • By Pixie5740 12th Jun 17, 7:50 PM
    • 10,816 Posts
    • 14,943 Thanks
    Pixie5740
    • #4
    • 12th Jun 17, 7:50 PM
    • #4
    • 12th Jun 17, 7:50 PM
    Getting married won't make a difference. You own 1 property and at the end of transaction you would own 2 properties. 2 is greater than 1 ergo you would have to pay the additional SDLT. It's all in the guidance note.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

    Edit: I should caveat that with if your interest in property 1 is greater than £40k.
    Last edited by Pixie5740; 12-06-2017 at 7:59 PM.
    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.
    • G_M
    • By G_M 12th Jun 17, 10:39 PM
    • 41,058 Posts
    • 47,161 Thanks
    G_M
    • #5
    • 12th Jun 17, 10:39 PM
    • #5
    • 12th Jun 17, 10:39 PM
    * you own 1 property .
    * you plan to buy a 2nd property.
    * you pay additional SDLT

    * if you sell the current property (to your friend or a stranger0, you will own 0 properties
    * you then buy a new property - your only property
    * no additional SDLT

    * you own 1 property.
    * you get married.
    * you still own 1 property
    * you buy a 2nd property
    * you pay additional SDLT

    * your fiance owns 0 properies ( I assume)
    * she buys a property
    * she now owns 1 property
    * no additional SDLT
    • itchyfeet123
    • By itchyfeet123 12th Jun 17, 10:44 PM
    • 395 Posts
    • 452 Thanks
    itchyfeet123
    • #6
    • 12th Jun 17, 10:44 PM
    • #6
    • 12th Jun 17, 10:44 PM
    I have become an unwilling landlord due to economic downturn. It seems very unfair that I am penalised yet again when buying what will be my marital home and only residence.
    Originally posted by Moderatelymod2
    My heart bleeds.
    • bob bank spanker
    • By bob bank spanker 12th Jun 17, 10:57 PM
    • 479 Posts
    • 831 Thanks
    bob bank spanker
    • #7
    • 12th Jun 17, 10:57 PM
    • #7
    • 12th Jun 17, 10:57 PM
    My heart bleeds.
    Originally posted by itchyfeet123
    Any need for a that?
    • itchyfeet123
    • By itchyfeet123 13th Jun 17, 12:09 AM
    • 395 Posts
    • 452 Thanks
    itchyfeet123
    • #8
    • 13th Jun 17, 12:09 AM
    • #8
    • 13th Jun 17, 12:09 AM
    Any need for a that?
    Originally posted by bob bank spanker
    Need? About the same amount as the need the OP had to include a comment about how unfaaaaair it is in the question.
    • Tiners
    • By Tiners 13th Jun 17, 5:54 AM
    • 190 Posts
    • 203 Thanks
    Tiners
    • #9
    • 13th Jun 17, 5:54 AM
    • #9
    • 13th Jun 17, 5:54 AM
    OP you're not an ''accidental'' landlord at all, you're a landlord of your of your own free choice.

    You're already apparently in a position to buy a second property without having to sell your existing property and yet still you're whinging and whining about how ''unfair'' it is and how you're being ''penalised'' for not being able to hoard houses.

    I can remember property market downturns in the past where people had to just accept the fact of NE. take the hit and sell for less than they paid.. and that was on primary residences and family homes NOT on secondary investment properties.
    But of course, that was in the days before massive government and BoE intervention in the property market and a 'support home owners at all costs' mentality amongst the policy makers.
    Last edited by Tiners; 13-06-2017 at 5:59 AM.
    • AdrianC
    • By AdrianC 13th Jun 17, 8:16 AM
    • 15,045 Posts
    • 13,368 Thanks
    AdrianC
    Hi all, can anyone advise if we are liable for or can avoid the higher rate of stamp duty on a 2nd property, if the facts are:

    Property 1
    I have a mortgaged with a friend - purchased approx 10 years ago.
    This property has not been my residence for 4 years.
    We would sell it but it is in a lot of negative equity.
    It is now let out.

    Property 2
    My fianc! (a different person than property 1) and I are now buying a property which will be our sole residence.
    She is a first time buyer, obviously I am not.

    Also, would the outcome be any different if we were married before the sale was complete?
    Originally posted by Moderatelymod2
    The only difference is that if your fiancee buys prop2 on her own, there will not be the 3% hike, but if she's your wife, there will be.

    I have become an unwilling landlord due to economic downturn. It seems very unfair that I am penalised yet again when buying what will be my marital home and only residence.
    You now own one property.
    At the end you will own two properties.

    If you don't want to pay the extra, cut your losses on your rental property and sell it.

    Yes, it is that easy.
    • juniordoc
    • By juniordoc 13th Jun 17, 8:22 AM
    • 152 Posts
    • 101 Thanks
    juniordoc
    Agree with others, sell a property or pay the tax you owe.
    There are many people in the UK that can't afford to buy one house, count yourself lucky!
    • Davesnave
    • By Davesnave 13th Jun 17, 9:01 AM
    • 23,104 Posts
    • 88,423 Thanks
    Davesnave
    Any need for a that?
    Originally posted by bob bank spanker
    A that?

    I've been looking for a that for a long time to go with my this, but they're as rare as those these!

    I can't see it here now...... Which way did it go?
    'A society grows great when old men plant trees whose shade they'll never sit in.'
    • AdrianC
    • By AdrianC 13th Jun 17, 9:06 AM
    • 15,045 Posts
    • 13,368 Thanks
    AdrianC
    A that?

    I've been looking for a that for a long time to go with my this, but they're as rare as those these!

    I can't see it here now...... Which way did it go?
    Originally posted by Davesnave
    That-a-way.
    • csgohan4
    • By csgohan4 13th Jun 17, 9:09 AM
    • 3,766 Posts
    • 2,351 Thanks
    csgohan4
    wish I could afford to buy 2 houses...
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • bob bank spanker
    • By bob bank spanker 13th Jun 17, 9:10 AM
    • 479 Posts
    • 831 Thanks
    bob bank spanker
    A that?

    I've been looking for a that for a long time to go with my this, but they're as rare as those these!

    I can't see it here now...... Which way did it go?
    Originally posted by Davesnave
    Damn iphone keyboard at 11pm.....


    There is no need for others to be so vitriolic to the OP - they have come here for help not to be judged.


    In many ways it is unfair - our tax code quite openly allows you to carry capital losses forward, and in certain circumstances relieve them against other taxes such as Income Tax. Why not allow relief against SDLT, where the loss was also incurred on residential property?
    Last edited by bob bank spanker; 13-06-2017 at 9:25 AM.
    • AdrianC
    • By AdrianC 13th Jun 17, 9:19 AM
    • 15,045 Posts
    • 13,368 Thanks
    AdrianC
    In many ways it is unfair - our tax code quite openly allows you to carry capital losses forward, and in certain circumstances relieve them against other taxes such as Income Tax. Why not allow relief against SDLT, where the loss was also incurred on residential property?
    Originally posted by bob bank spanker
    Because this isn't a tax on a capital loss. It's a tax on a property purchase. And the tax law is quite clear and simple, with the intent of dissuading people from doing exactly what the OP is doing...
    • Mortgage_Adviser
    • By Mortgage_Adviser 13th Jun 17, 9:20 AM
    • 15 Posts
    • 12 Thanks
    Mortgage_Adviser
    I agree. Don't see the reason why OP is being battered here. He is in a negative equity, so is not like he doesn''t want to sell the house. If he sells it he may need to give away all his emergency etc savings.
    • AdrianC
    • By AdrianC 13th Jun 17, 9:21 AM
    • 15,045 Posts
    • 13,368 Thanks
    AdrianC
    I agree. Don't see the reason why OP is being battered here. He is in a negative equity, so is not like he doesn''t want to sell the house. If he sells it he may need to give away all his emergency etc savings.
    Originally posted by Mortgage_Adviser
    He could always use the money he's saved towards the new purchase to buy his business partner out of the first property and live in that.
    • bob bank spanker
    • By bob bank spanker 13th Jun 17, 9:25 AM
    • 479 Posts
    • 831 Thanks
    bob bank spanker
    Because this isn't a tax on a capital loss. It's a tax on a property purchase. And the tax law is quite clear and simple, with the intent of dissuading people from doing exactly what the OP is doing...
    Originally posted by AdrianC
    No, but they have a capital loss. On disposal, that loss can be relieved. Why not against SDLT? There is no logical reason why not - it was incurred in a residential property transaction - exactly like the next transaction. This was, like most recent tax changes, put through on the quick by an incompetent treasury.
    • AdrianC
    • By AdrianC 13th Jun 17, 9:32 AM
    • 15,045 Posts
    • 13,368 Thanks
    AdrianC
    No, but they have a capital loss. On disposal, that loss can be relieved. Why not against SDLT? There is no logical reason why not - it was incurred in a residential property transaction - exactly like the next transaction. This was, like most recent tax changes, put through on the quick by an incompetent treasury.
    Originally posted by bob bank spanker
    You seem to be suggesting that the recent change to dissuade BtL either should have changed the way ALL SDLT works, or somehow did.

    SDLT is a simple %age of purchase value. It has been since it was introduced in 2003, as a replacement for SD, which had a trail back to 1694. Much of the current legislation still goes back to 1891. The way in which the %age was calculated changed in 2014, to move from slabs to tiers, and the 3% for additional properties was added in 2015, but the basics haven't changed at all.
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