First Time Owner Occupier - Higher Rate Stamp Duty

Raymondo84_2

Hi,


I've rented for several years after uni, and hoping to buy a property in the coming months to become an owner occupier.


My issue is that I do currently have a share on two other properties, both are co-owned with family. I haven't ever lived in either of these, they have never been a main residence, and the council tax records will show that they've been occupied with tenants since they were purchased 4 years ago. And my council tax records show that I've paid council tax on various properties I've rented over several years.


I've studied the guidance, and I'm still not entirely sure how this effects me. There is condition D which I believe doesn't apply in my case, as the new property is replacing my rented main residence;


"the dwelling being purchased is not replacing the purchaser’s only or main residence"


Has anyone seen anything in the guidance which covers this? Or have any idea how this will be viewed by HMRC?

Hoploz

You already own properties and you are buying another, so you'll be liable for the extra.

mrginge

You currently own two properties.
If you buy a new one for any reason, you will own three.
You then have to pay the 3% surcharge.

Your current rented property is of zero relevance to this formula.

MrJB

Where the new house replaces a rental home then you're liable. If you were selling your main residence and buying another residence it wouldn't be applicable. Not really sure I fully follow their logic, but that was the guidance I read on the subject.

Raymondo84_2

I've read about the new house replacing a rental home on the zoopla interpretation of the guidance but I couldn't see that in HMRC's guidance. All I could see was the following which I interpret as protecting renters


"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."


The guidance refers to two elements of Condition D;


1. The disposal of a previous Main residence
2. The dwelling acquired must be intended to be occupied as the individual’s only or main residence


The rented property is, from what I understand, my main residence. The dwelling I'm purchasing is going to replace my residence (their is a big emphasis on main residence).


As I understand it, as long as you are replacing a main residence (relocating, moving) then you won't be eligible to pay the higher rate providing that your old main residence is being disposed of to stop building up portfolio's by moving on regularly.

AdrianC

Raymondo84 wrote: »

I do currently have a share on two other properties

Odd definition of "first time owner"

Bluebirdman_of_Alcathays

Raymondo84 wrote: »

I've read about the new house replacing a rental home on the zoopla interpretation of the guidance but I couldn't see that in HMRC's guidance. All I could see was the following which I interpret as protecting renters


"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."


The guidance refers to two elements of Condition D;


1. The disposal of a previous Main residence
2. The dwelling acquired must be intended to be occupied as the individual’s only or main residence


The rented property is, from what I understand, my main residence. The dwelling I'm purchasing is going to replace my residence (their is a big emphasis on main residence).


As I understand it, as long as you are replacing a main residence (relocating, moving) then you won't be eligible to pay the higher rate providing that your old main residence is being disposed of to stop building up portfolio's by moving on regularly.

You are not disposing of your residence - you can't dispose of it as you don't own it.


As mentioned before, you are liable.

Raymondo84_2

First time owner occupier! I've never owned my main residence,

MrJB

The HMRC guidance states otherwise. It specifically states that you have to be selling/gifting/disposing of your previous residence for it to qualify.

https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties#introduction

It also explains the logic behind their move - it stops people buying a first buy to let before owning their own home. And then renting another property for 6 months and then buying a second property and replacing their rental property with it as their main residence (which is actually quite sensible!).

AdrianC

Raymondo84 wrote: »

First time owner occupier! I've never owned my main residence,

Whether you occupy any of the properties you own is irrelevant. You currently own two properties and are purchasing a third.

Hoploz

Raymondo it looks pretty unanimous here, if you think there's legally a different answer, you'd best check with your solicitor.