Will I be liable for 3% extra stamp duty? (Scotland)

llindsey

I need help!! Very confused as to if I will have to pay the new stamp duty...

I own a flat which I moved out of 3 years ago and have rented out since.

I am now buying a house with my husband and wondered if we will be liable for the 3% extra stamp duty?

The flat hasn't been my main residence in over 3 years and this house will be my main residence.

I have had conflicting advice. Solicitor doesn't seem to think I will be liable but from reading online I cant see how I wouldn't be liable.

Is there a difference in the Scottish tax to the English tax?

rlc7

There is a huge difference between Scotland and England now.


According The Guardian: "The new higher rates of stamp duty land tax (SDLT) do not apply in Scotland because SDLT has been abolished there. However, the Scottish government replaced SDLT with land and buildings transaction tax (LBTT). This is remarkably similar to SDLT and will introduce a 3% supplement on the tax paid on the purchase of additional residential properties on or after 1 April 2016. "


Looks like you're in the clear if you purchase the new house before April.


As I'm a new user I can't post links but if you google: "Does the 3% stamp duty for second properties apply in Scotland? " the link to the guardian should appear.

davidmcn

It's still going through Parliament so this is partly guesswork based on the initial draft Bill, but yes, assuming you don't settle your purchase before the deadline (and hadn't concluded missives before it was first announced) you'll be (jointly) liable for the additional 3%. You don't fall in any of the exemptions.

The Scottish tax (Land & Buildings Transaction Tax) is fully devolved so the rUK (Stamp Duty Land Tax) rules don't apply - but they are pretty similar.

llindsey

I have an offer on a house at the moment and set a estimated date of 30th March but its closing tomorrow so may not get it.

The chance of me finding something else and completing before April is almost zero.

Will be money have to be paid upfront if I intend on selling my rental property? Not able to sell until at least September due to a tenant.

The extra cost will be about 9k and I just cant afford that! Original rental property is only worth about 70k so would be very annoying to have to pay out the full amount on my main home as if I was an investor.

Any way around it? Seems unfair that I would be treated the same as an investor who is buying to rent out. Only reason my flat is rented out is due to the property crash and negative equity.

always_sunny

the flowchart from the gov is very vague!


if a person has say 4 BTL and 1 main residence, and simply upgrades the 1 main residence (still owning the BTLs) would not incur the higher charge.

If a person (like OP) has a BTL rented out for years, rent a main residence and buys a main residence will be liable??

Why isn't the person with 4 BTL replacing the main residence asked why s/he isn't using one of the BTL as a main residence? :eek:

Bluebirdman_of_Alcathays

always_sunny wrote: »

the flowchart from the gov is very vague!


if a person has say 4 BTL and 1 main residence, and simply upgrades the 1 main residence (still owning the BTLs) would not incur the higher charge.

If a person (like OP) has a BTL rented out for years, rent a main residence and buys a main residence will be liable??

Why isn't the person with 4 BTL replacing the main residence asked why s/he isn't using one of the BTL as a main residence? :eek:

It is not vague at all - the OP is purchasing a property, and will end up with 2 properties. They are not selling their main residence (they can't, as they are renting), and will therefore end up liable to the extra 3%.


I suspect the logic (but obviously cannot confirm) behind this is that the person with 4 BTL is not reducing the number of houses available to FTB's by changing their main residence. The OP, very obviously, is, as they are going from 1 to 2 properties. Therefore, OP pays, Mr/s 4 BTL does not.

always_sunny

Bluebirdman_of_Alcathays wrote: »

It is not vague at all - the OP is purchasing a property, and will end up with 2 properties. They are not selling their main residence (they can't, as they are renting), and will therefore end up liable to the extra 3%.


I suspect the logic (but obviously cannot confirm) behind this is that the person with 4 BTL is not reducing the number of houses available to FTB's by changing their main residence. The OP, very obviously, is, as they are going from 1 to 2 properties. Therefore, OP pays, Mr/s 4 BTL does not.

so the OP could buy a hut for a penny in god knows where, declare it as main residence, sell it for 1/2 penny the day after and ta-da, OP will also not be liable anymore... I can see how oligarchs are going to sell igloos in Siberia in exchange for main residence in central London! :T

davidmcn

llindsey wrote: »

Will be money have to be paid upfront if I intend on selling my rental property?

Yes.

Any way around it?

Put property in husband's name?

Don't buy until you've sold rental property?

Bluebirdman_of_Alcathays

always_sunny wrote: »

so the OP could buy a hut for a penny in god knows where, declare it as main residence, sell it for 1/2 penny the day after and ta-da, OP will also not be liable anymore... I can see how oligarchs are going to sell igloos in Siberia in exchange for main residence in central London! :T

Declaring something as your main residence when it isn't would be tax evasion, and illegal, so I can see a flaw in your plan.

llindsey

Property cant be put into Husbands name as we need both incomes for the mortgage.

Don't really want to wait until after I have sold my flat unless we really have to.

BlaEm

I don't know the answer but wanted to pose another question which perhaps someone else can advise on:
What if you purchase together, but in unequal shares - e.g. your husband 99%, and you 1%?
I'd think you'd then only be liable on your share of the property value i.e. an extra 3% on your 1%.

As I said I don't know if that's possible, or what would happen if you then decided to transfer the second property to either be 50/50 TIC or joint tenants at a later date.