Stamp Duty question - I can't find an answer to this anywhere.

ambc

Hi all - I'm aware of the new stamp duty increases on the purchase of second homes, however I'm in a situation that I can't seem to find a definite answer to and wondered if anyone else was in the same boat.

Ok, I'm due to start a mortgage application with my partner in the next month or two for a family home we'll live in. We're currently renting a house. She also owns a flat which she originally lived in (but not for the last 6 years), however she currently lets it to a tenant because it's too small for all of us. We can't really sell it either, because it's in negative equity. I don't own a property right now, but have owned in the past (my previous house sold in 2007).

So, what I'm trying to get to the bottom of is whether we'll need to pay the extra stamp duty on a family home we'll purchase together, because it will mean finding an additional £5k.

The bit I'm stuck on is the part that asks whether the property we're buying is our 'main residence'. It will be our 'main residence', but this is where it gets murky because we're not actually selling a current 'main residence' because we don't actually own one!

Anyone have a clue?

Thanks! )

ACG

You are purchasing a main residence and you WILL need to pay the extra stamp duty.

If your income is enough on its own, you could possibly buy the new place solely in your name and avoid the extra stamp duty.

ambc

Thanks for the quick reply.

Any chance you could explain further though, 'cos the calculators I've used generally say I'll pay the lower rate while the fuller explanations (ie the gov.uk) aren't 100% clear in this situation. I'm still not really understanding why I'd need to pay the higher rate though, given that it will be our main residence.

Cheers.

ambc

Actually, scratch that. I've just found the exact scenario here: http://www.mortgagesolutions.co.uk/news/2016/03/16/govt-qa-will-i-have-to-pay-the-stamp-duty-surcharge-budget-2016/

Q. My partner and I are in the process of purchasing a property jointly, this will be our main residence. I currently own another property which I rent out but my partner is a first time buyer. Will we have to pay the higher rates of SDLT on the whole purchase price or just on the 50% that I am purchasing?

A. The higher rates will apply to the total purchase price as following the purchase you will own an interest in an additional residential property. For joint purchases the higher rates will apply if either of the purchasers own other residential property.

Thanks again.

ACG

My understanding is ANY second property purchase whether your main residence, holiday home, BTL, home for mother to live in etc etc will incur the higher rate stamp duty.

It does not matter what the reason is for the second property, its the fact that you will own more than one residential property.

amnblog

Will you own an extra property at the end of the day of the purchase? - Yes.

Are you moving home but not selling your current home? - Yes

You pay the higher rate.

Don't rely on information from journals that is dated before the law changed.

Go to the horses mouth

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf

ambc

Yeah, thanks, got you.

It's gutting though, because this property my other half owns has already cost us a fortune in voids caused by damage from neighbours (on top of the hassle getting consent to let). And now it's also the reason why we have to find an extra £5k while buying a completely different property that we can actually live in!

Aaargh!

Are you moving home but not selling your current home? - Yes

Technically we wouldn't even be moving because we're likely buying from our current landlord.

Honestly, I give up.

amnblog

Your response is at the ballot box in 2019.

ambc

Your response is at the ballot box in 2019.

Certainly is.

Except I'll already have paid the bleedin' stamp duty by then though.

Gah.

AnotherJoe

ambc wrote: »

It's gutting though, because this property my other half owns has already cost us a fortune in voids caused by damage from neighbours (on top of the hassle getting consent to let). And now it's also the reason why we have to find an extra £5k while buying a completely different property that we can actually live in!

Sounds as if you should cut your losses and sell it then. How much are you losing every month?

Thrugelmir

Addressing the negative equity should be your priority objective.