3% Stamp Duty rise maybe applied to Main Residence too.

polyphonic99

There have been many articles in the media regarding the proposed new 3% Stamp Duty surcharge on BTL and second homes, focusing on these "second" properties and encouraging people to complete before April 16. However, I have not seen any analysis of how that may also now apply to your main residence too, if you move home.

If you currently own both a main residence and a second property, or even a small share in a second property eg BTL, a holiday home, student home for your children, inherited property (jointly or solely owned from inheritance) then if you then sell your main residence after April 16, because you want to move for work, downsize, divorce or for whatever reason, then your replacement main residence will effectively become your "second" property (you still own the BTL, HH etc at time of purchase) and you will thus be liable for the extra 3% tax when you move your main residence, which usually will be a much higher value than a secondary property

The only way you could avoid this extra 3% stamp duty surcharge on your main residence would be if you first sell any less valuable second property(ies), but then of course you will probably be liable for CGT.

Nice little trap Osborne has sprung there. Which party is Osborne in again?

Thrugelmir

The stamp duty is refundable if the "other" property is sold within 18 months.

All you've highlighted is the reasons why the rules will be so broad. As there'll be much rule bending if all eventualities aren't covered. This is more of a political gesture than a fiscal one.

polyphonic99

The stamp duty is refundable if the "other" property is sold within 18 months.

With respect, I don't think you have quite understood. I am NOT talking about the situation where you buy your next main residence before you sell your existing one, and then pay the 3% tax and get it refunded if your old main residence is sold within 18 months

I am talking about the following:
You currently own 2 properties: your own family home(A) AND a second (or share of a second) property eg BTL or Holiday Home(B)

You then want to sell your family home(A) and move to another one(C)
When you sell your family home you still have the "second" property(B), which then becomes your "only" property
When you purchase your new family home(C), since you already own a "first" property(B), even if it is a BTL or Holiday home, then your new family home(C) becomes your "second" property for Stamp Duty purposes and so you have to pay an extra 3% Stamp duty and that will NOT be refundable, unless you also sell the second property(B) BTL/HH within 18 months.

So if you have 2 properties now (A) and (B)and want to move to a new family home(C), to avoid the extra tax you would have to sell BOTH properties (A) and (B) and if you did that you would be liable to CGT on your non-main residence property(B)

If you have no intention of selling property(B) but only want to move your family home (A) to (C), you would have to pay the extra 3% Stamp Duty, and it would not be refunded.

Ms_Sophia

I have the same understanding as OP.
Effectively, they want to penalise everybody who owns more than 1 property or will own in the future.

Daniel54

The details have still to be announced but I expect Paul Lewis to be correct when he writes :

"Someone who owns a home they live in and also owns a second home - a holiday home or weekend retreat for example or a property they rent out - will not pay SDLT2 if they sell the home they live in and buy another which they then live in. But they will be liable to SDLT2 if they sell their holiday home or rented property and buy another."

http://paullewismoney.blogspot.jp/2015/11/stamping-on-additional-homes.html

polyphonic99

The details have still to be announced but I expect Paul Lewis to be correct when he writes :

"Someone who owns a home they live in and also owns a second home - a holiday home or weekend retreat for example or a property they rent out - will not pay SDLT2 if they sell the home they live in and buy another which they then live in. But they will be liable to SDLT2 if they sell their holiday home or rented property and buy another."

http://paullewismoney.blogspot.jp/2015/11/stamping-on-additional-homes.html

Thank you Daniel54, I had not seen this in the mainstream media at all, if it is implemented in this way, then yes it is not an issue.

theGrinch

Making an already complex system more complex and pernicious.

Senior_Paper_Monitor

There are many contradictory statements, assumptions and guesses floating around with regard to various scenarios - I suspect it will be some weeks before any authoritative documented clarification becomes available.

booksurr

Senior_Paper_Monitor wrote: »

There are many contradictory statements, assumptions and guesses floating around with regard to various scenarios - I suspect it will be some weeks before any authoritative documented clarification becomes available.

at last someone with a sense of perspective instead of knee jerk political rhetoric

BlaEm

I'm interested to see what the case will be if you buy a new property, but instead of selling your existing main residence you retain it to let. This is what I was hoping to do in a few years with my current home.

And if the surcharge would apply, what would happen if the existing residence is owned by a sole person, but the new purchase is joint with someone who's a FTB.

richtung

BlaEm wrote: »

I'm interested to see what the case will be if you buy a new property, but instead of selling your existing main residence you retain it to let. This is what I was hoping to do in a few years with my current home.

And if the surcharge would apply, what would happen if the existing residence is owned by a sole person, but the new purchase is joint with someone who's a FTB.

We're in this exact situation right now - we've had an offer accepted on what will be our new main residence. Current house (which is in my name only) will be let out.

Worried we wont complete before the 1st April..

Rich