New Stamp Duty - Second Home Main Residency

shimlad

My situation is quite unusual.

I part own a small flat with 2 other people.

The flat was purchased a few years as a holiday home. It is no ones main residency.

I currently rent the house that i am living in.

Under the new rules, if I buy a house after April which will be main residency, technical i will own two properties, will i have to pay the high stamp duty?

Doozergirl

In a word, yes.

shimlad

Something doesn't seem right here...

See this example from the main gov information on the new stamp duty.

Example 10:
O is a buy-to-let investor with 10 residential properties in his portfolio. He also owns one residential property which he uses as his main residence. He decides to sell his previous main residence and purchase a new main residence.
At the end of the day of the transaction, he owns 11 properties – his new main residence and his 10 buy-to-let properties. However, as he has replaced his main residence he will not pay the higher rates of SDLT.

Because the buy to let landlord already had owned his home as well, he doesn't pay the higher stamp duty.

But i do not own my own home i am renting, so because of that i would have to.

Sounds unfair to me! :mad:

Pixie5740

Why unfair? The new legislation is also targeting those who have a main home and second home, a holiday home for example. If you don't want to pay the increased SDLT rate then you need to get a wriggle on and complete before April. Alternatively you could get the other owners of the holiday home to buy you out.

System

But the good news is that once you have bought your new residence, you won't have to pay the higher SDLT when you sell it and buy a new one

AnotherJoe

There does seem to be an anomaly in that if you own your residence you are OK but rent it and you arent.

shimlad

See the government example i pasted compared to my situation.

Buy to let landlord

10 buy to let properties + 1 owned house for main residency

Doesnt pay higher stamp duty when moving

Me
1 holiday home + renting house for main residency

Does pay higher stamp duty when moving

booksurr

shimlad wrote: »

See the government example i pasted compared to my situation.

Buy to let landlord

10 buy to let properties + 1 owned house for main residency

Doesnt pay higher stamp duty when moving

Me
1 holiday home + renting house for main residency

Does pay higher stamp duty when moving

repeating a quote will not alter the answer. You are still deliberately setting out to own 2 properties and therefore keep one of them out of the housing market so no one else can buy it. As such you are the direct target for the legislation because you will own 2 homes.

the BTL LL only has 1 home that he lives in, when he sells it and buys another he still only has one home. If he sells any of the 10 BTL and buys a replacement for that one then he has to pay because that is not his home or a SECOND home like you possess

if you want to rant about unfair then respond to the consultation document, that is after all why there is a consultation and the policy is not yet law

Doozergirl

Yes, we get it. And although you don't see it that way, it is fair.

The government can't retrospectively tax properties already bought. If that landlord were increasing their portfolio now or swaps one BTL for another, they will pay the extra.

The plan is to tax anyone from now who is increasing their portfolio.

If you buy another property, you will be increasing your portfolio.

You can avoid paying the extra SDLT if you buy before April or sell or live in your pied-a-terre. If you want to avoid it, you can avoid it. It's your choice.

Looking at it from another angle, if they don't tax a home you might purchase after April, people could declare their main residence as an existing 'second home' and go and buy themselves a new 'main residence' and avoid the extra SDLT. Nothing but trouble and the fact still remains, you will have two houses. They're effectively retro-taxing your holiday home by taxing you on the main residence.

shimlad

Sorry i wasn't just repeating myself i was trying to reply direct to Pixie5740's point.

Anyway, to me it does seems that if you don't currently own the home you live in i.e. you are renting you there should be some sort of exemption.

Also if the second property you own is worth less than 40,000 it doesn't count either. We paid 43,000 between three of us, so my share is worth 14,300.

It does feel like i am falling through a crack here somewhere.

agrinnall

shimlad wrote: »

Anyway, to me it does seems that if you don't currently own the home you live in i.e. you are renting you there should be some sort of exemption.

Why? You have made the decision to prioritise purchase of a rental property over purchase of your own home, you didn't have to do that. If you don't like it sell the rental before you buy the main home, then you won't be hit with the extra stamp duty.