Stamp Duty question

mozza78

I realise there have been a lot of stamp duty question on here but couldn't find an answer to my particular question. Forgive me if its been asked before but even consulting the Government decision tree and the numerous examples on their site I am rather unsure.

I am currently an expat with 3 BTLs in Edinburgh. I have lived in none of them, have no voting registration there, have not used it as a main address etc. If I were wishing to move back to Scotland and buy a main residence there would I be able to move back into one of my BTLs then live in it for a while before selling it as my main residence and buying somewhere else thus avoiding the 3% additional LBTT? If so how long would I have to live in it to qualify it as my main address? Or alternatively would I be able to just buy a new house, more straight in as my main residence and pay the lower SD. I currently rent abroad and dont have a main residence to sell.

Any help greatly appreciated.

booksurr

there are not government officals who post on these boards. Any answers given are simply from people who have read the guide, just like you could
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf

the rule for exemption upon replacement of your main home is that the place being sold must have been your main home in the 3 year period preceding its sale. Residence is not defined in terms of minimum period, the rule simply says "at some time" - see para 3.21

of course if you do move into an ex BTL be careful what you claim when you come to do the CGT calculation on it when selling since, by definition, you will have to claim it as your main residence for CGT purposes. HMRC are a bit sharper when it comes to deciding if you really did occupy it as a main residence for CGT purposes or whether you did so merely to avoid a bit of tax - fair bit of case law provides precedents for what is or is not "real" occupation. Returning to the UK from rental abroad would put you in a reasonable start point for saying the ex BTL was your home, but if you then move out "quickly" and get somewhere that patently is a much more "suitable" main home, HMRC could argue that your claim to main residence for CGT purposes was contrived to avoid CGT. Just be aware of that possibility.

AnotherJoe

A case reported here had some one in a similar position in his BTL for a year who still ended up paying on the grounds that it was being done merely to avoid CGT and he never had any real intention of staying there. It's about intention apparently. So you somehow almost need to prove it was your intention to stay there.
Depending on your financial circumstances it might take some time before you build up a credit history in the UK so a couple of years might pass anyway, whether here than would be worth living in one of your BTLs for that long only you will know,

mozza78

That's great thanks for a prompt and helpful reply. I did read the gov website but was still rather unclear to me as you say it doesn't seem to specify what constitutes main residence in terms of length of occupancy The relevant bit I read being...

HMRC will take into account a number of factors when considering whether a given property is an individual’s main residence. These will include:

where the individual and their family spends their time;
if the individual has children, where they go to school;
at which residence the individual is registered to vote;
where the individual works;
the location and degree of furnishing and location of moveable possessions; and
the correspondence and registration addresses given to various organisations.

It would be quite feasible that I would want to move into one of my BTL properties upon return to the UK before purchasing a 'main residence' therefore register the address, gas bills etc in my name especially if it then saved me 3% on stamp duty I may wish to sell. Thanks for clarifying the ambiguity of the 'in the 3 year preceding its sale' part.

Don't worry not looking to fiddle the taxman on CGT.. had my places independently valued so that we could calculate that correctly when it finally comes to dispose of them. I also get confused as to which parts are relevant to Scotland and which the rest of the UK! I think a phone call to a Scottish solicitor may be what's required.

davidmcn

Possibly some confusion here as you are buying in Scotland and (correctly) referred to Land & Buildings Transaction Tax in your OP, which is governed by Revenue Scotland - so you should be reading their guidance and legislation, not those relating to SDLT and HMRC. The rules are similar but different!

mozza78

Yes thanks David I did start on the revenue scot site but couldn't find the answer there but figured the rules would probably be very similar. Time to make a few calls!

booksurr

oops sorry - missed the Scottish link, too used to thinking of them independently...:D I agree the LTTB pages on the Scottish govt website are awfu. However, a brief google suggests that the actual law enacted for Scotland is indeed broadly the same as for the loyal UK citizen

http://www.legislation.gov.uk/asp/2016/11/section/1/enacted

A buyer is replacing the buyer’s only or main residence if—

(a)during the period of 18 months ending with the effective date of the transaction, the buyer has disposed of the ownership of a dwelling,

(b)that dwelling was the buyer’s only or main residence at any time during the period of 18 months, and

(c)on the effective date of the transaction, the buyer intends to occupy the dwelling that is or forms part of the subject-matter of the transaction as the buyer’s only or main residence.

whether that act has subsequently been amended to increase it to 36 months (as was indeed done for SDLT) is down to you to find out

booksurr

mozza78 wrote: »

Don't worry not looking to fiddle the taxman on CGT..

not suggesting you are, merely posting a "heads up"

the point I was making is that HMRC have won court cases where they refused to allow the taxpayer to claim main residence relief from CGT as HMRC deemed the claim to be false as the intention behind "occupying" the property was wholly for tax related purposes, not because it was actually intended from the outset to merely be their transitory "home" until such time as they found a "permanent" solution. The legal position appears to be that "every case will be decided upon its facts".

As you understand, the issue is one of quality, not quantity, of occupation, however, case law now attaches some weight to "the expectation of continuity and permanence at the outset" when deciding on "quality". I appreciate the facts of these cases are of course not yours, but they do outline that principle: http://www.taxadvisermagazine.com/article/great-expectations-0

the other 2 main cases are :
Goodwin v Curtis ([1998] STC 475)
Moore v HMRC ([2013] UKFTT 433 (TC))