Buying a buy-to-let as sole property - stamp duty?

calad1

Hi,

We are thinking of buying a property in order to let it to my sister. We do not own another property as we have just sold our previous home in the UK and currently live in the US where we are renting. Our plan is to buy an investment flat while we live here, then when we return in 3 years we will sell.

But will we have to pay the extra stamp duty that the government has just brought in for buy-to-let properties? Or is that only if it's an additional property?

We are just trying to weigh up whether it's worth doing this, or just doesn't make financial sense.

Any advice gratefully received!

bris

You have to pay it as it's a BTL whether you own a property or not.


If 3% is going to tip it over the edge for you then it's certainly not worth it and with the new rules on interest payments tax relief getting scrapped it's going to get much worse.

Bluebirdman_of_Alcathays

No - the additional SDLT has nothing to do with BTL, it simply relates to how many properties you own. As I will be the only property you own, you will pay the lower SDLT.


You will have to consider CGT implications, and there will be Income Tax due on any profit you make, although I know little about what arrangements are in place for US residents.

Bluebirdman_of_Alcathays

bris wrote: »

You have to pay it as it's a BTL whether you own a property or not.


If 3% is going to tip it over the edge for you then it's certainly not worth it and with the new rules on interest payments tax relief getting scrapped it's going to get much worse.

Rubbish - look at the diagram right at the beginning of this link.


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

dimbo61

The Extra stamp duty is the least of your worries.
You live in the USA
You want to rent to family
You do not already own a property in the UK
You want to buy as an Investment property with a BTL mortgage so I hope you have a 25% deposit and other money for fees.
You are starting a business as a BTL landlord at a very difficult time for Landlords with the new Tax changes and 3% extra stamp duty

silvercar

I think you will struggle to get a mortgage with your scenario.

Overseas landlord.

Non -property owning landlord.

Letting to family.

Any of the above would limit your choice of lenders, putting all 3 together and I doubt you will find one.

calad1

We spoke briefly to a mortgage broker a few months ago who felt it should be OK finding a mortgage as we would probably only require around a 20-30% mortgage. She also said that it wouldn't matter who we were planning to rent out to, as long as the mortgage company felt the projected approximate rental return would be fine.

calad1

We know it's not going to be a big money making scheme, just as long as we're not going to lose lots of money. We want to put the money from our house sale somewhere, keep a toe on the property ladder in the UK, and help my sister out who cannot currently afford to rent a flat (she rents a room at the moment). We'd like to look at 2 bedroom flats so she can have a flatmate and we'll split their rent between us so she has the chance to save some money up while we're abroad.

elverson

Renting to family members is another 'no' for some lenders.

[Deleted User]

calad1 wrote: »

we'll split their rent between us so she has the chance to save some money up while we're abroad.

What do you mean by this? Are you hoping she'll save some of the tenants rent money if you allow her to take it? Do you trust her enough to do this?

Will she be 'managing' the lodger arrangment? Do you think she will be able to do this? Are you/she prepared for taking on LL responsibilities?

booksurr

bris wrote: »

You have to pay it as it's a BTL whether you own a property or not.


If 3% is going to tip it over the edge for you then it's certainly not worth it and with the new rules on interest payments tax relief getting scrapped it's going to get much worse.

what a pity you've only read Daily Mail reports rather than the actual rules before posting

it is not a tax on BTL, it is a tax on ADDITIONAL property. OP does not own an existing property therefore will not own an additional one so is not liable for the higher rate SDLT

https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-for-purchases-of-additional-residential-properties