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  • FIRST POST
    • Joff Campbell
    • By Joff Campbell 28th Nov 17, 1:11 PM
    • 1Posts
    • 0Thanks
    Joff Campbell
    Stamp Duty -hidden dangers of owning a buy lot let
    • #1
    • 28th Nov 17, 1:11 PM
    Stamp Duty -hidden dangers of owning a buy lot let 28th Nov 17 at 1:11 PM
    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!!
Page 1
    • rtho782
    • By rtho782 28th Nov 17, 1:21 PM
    • 1,037 Posts
    • 748 Thanks
    rtho782
    • #2
    • 28th Nov 17, 1:21 PM
    • #2
    • 28th Nov 17, 1:21 PM
    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.
    Originally posted by Joff Campbell
    Is there a question here or are you just stating the law for our info?
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • Pixie5740
    • By Pixie5740 28th Nov 17, 1:21 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    • #3
    • 28th Nov 17, 1:21 PM
    • #3
    • 28th Nov 17, 1:21 PM
    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.

    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!!
    Originally posted by Joff Campbell
    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?
    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.
    • Lysimache
    • By Lysimache 28th Nov 17, 1:28 PM
    • 91 Posts
    • 38 Thanks
    Lysimache
    • #4
    • 28th Nov 17, 1:28 PM
    • #4
    • 28th Nov 17, 1:28 PM
    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.
    Last edited by Lysimache; 28-11-2017 at 1:30 PM.
    • rtho782
    • By rtho782 28th Nov 17, 1:28 PM
    • 1,037 Posts
    • 748 Thanks
    rtho782
    • #5
    • 28th Nov 17, 1:28 PM
    • #5
    • 28th Nov 17, 1:28 PM
    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?
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • bowlhead99
    • By bowlhead99 28th Nov 17, 1:29 PM
    • 6,999 Posts
    • 12,606 Thanks
    bowlhead99
    • #6
    • 28th Nov 17, 1:29 PM
    • #6
    • 28th Nov 17, 1:29 PM
    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
    • By Pixie5740 28th Nov 17, 1:30 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    • #7
    • 28th Nov 17, 1:30 PM
    • #7
    • 28th Nov 17, 1:30 PM
    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.
    Originally posted by Lysimache
    Maybe the poster has no reason to be outraged. Maybe he should read the guidance note to find out.
    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.
    • Pixie5740
    • By Pixie5740 28th Nov 17, 1:31 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    • #8
    • 28th Nov 17, 1:31 PM
    • #8
    • 28th Nov 17, 1:31 PM
    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.
    Originally posted by bowlhead99
    Not necessarily. The OP hasn't given enough information to say whether the higher rate will apply or not.
    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.
    • 00ec25
    • By 00ec25 28th Nov 17, 1:41 PM
    • 5,566 Posts
    • 4,971 Thanks
    00ec25
    • #9
    • 28th Nov 17, 1:41 PM
    • #9
    • 28th Nov 17, 1:41 PM
    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
    Originally posted by Lysimache
    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.
    Originally posted by Lysimache
    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"
    • bowlhead99
    • By bowlhead99 28th Nov 17, 1:45 PM
    • 6,999 Posts
    • 12,606 Thanks
    bowlhead99
    Not necessarily. The OP hasn't given enough information to say whether the higher rate will apply or not.
    Originally posted by Pixie5740
    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
    • By Pixie5740 28th Nov 17, 1:55 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    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.
    Originally posted by bowlhead99
    Would that be the same tax man who allegedly gave the OP this little gem.....

    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!!
    Originally posted by Joff Campbell
    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.
    • Lysimache
    • By Lysimache 28th Nov 17, 1:57 PM
    • 91 Posts
    • 38 Thanks
    Lysimache
    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.
    Originally posted by bowlhead99
    Ah I see, it's temporary.
    • SDLT Geek
    • By SDLT Geek 28th Nov 17, 10:43 PM
    • 29 Posts
    • 12 Thanks
    SDLT Geek
    If OP had a share in a property before the divorce, lived in it and has since disposed of the whole share, then the exception from the surcharge for the replacement of an only or main residence should apply.

    It is not true to say that the replacement exception is temporary. It is just that for some completions by 28 November 2018 the 3 year rules do not apply.
    • ThePants999
    • By ThePants999 28th Nov 17, 11:18 PM
    • 904 Posts
    • 1,057 Thanks
    ThePants999
    OP, what happened in your divorce? Did you previously own a property that you lived in?

    If, as part of divorce proceedings, you ceased to own a property that you previously owned and was your main residence, then you still qualify as replacing your main residence and the higher SDLT doesn't apply. From the guidance notes:

    3.16 Condition D is that the purchased dwelling is not a replacement of the purchaser’s
    only or main residence
    .
    3.17 There are two parts to a replacement of a purchaser’s main residence:
    ● there must be a disposal of a major interest in the purchaser’s or their spouse or
    civil partner’s previous main residence, and
    ● the dwelling acquired must be intended to be occupied as the individual’s only
    or main residence.

    3.18 The disposal of the previous main residence does not have to be by way of
    sale, although that is likely to be the case for most individuals. For example the
    property may have been gifted to someone else or transferred under a court order as
    part of a divorce settlement.

    3.19A For purchases on or before 26 November 2018, there is a replacement of a main
    residence if, at any time before the purchase, the purchaser, or their spouse or civil
    partner, disposed of a major interest in another dwelling and the purchaser has not
    purchased another main residence in the period between that disposal and the new
    purchase. That other dwelling must have been, at some time, the only or main
    residence of the purchaser.

    3.24 Renting a new main residence in the time between disposal and purchase will
    not prevent the purchase from being a replacement of a main residence unless the
    period of the tenancy agreed is more than seven years.
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