stamp duty- second home

Southernman · 1 September 2016 at 1:07PM

I already feel like I may know the answer but I'm not sure whether I'm filling in the government website calculator correctly so I'm really hoping someone more knowledgeable can shed some light!

My situation.

I own an apartment which i rent out. This is no longer on a residential mortgage. There is around £64k outstanding. I bought this property in March 2011.

I currently live with my boyfriend who has a residential mortgage on the property we live in. In the future we hope to purchase a property together after selling his current home by getting a joint residential mortgage. We are looking at properties around the £325000 mark (maximum). We would also keep my rented apartment.

Will I be subjected to the £6k stamp duty for the purchase of a residential property or because I have my apartment will I be stung with the second home stamp duty situation where I would be charged £16k stamp duty?

My gut feeling is we will have to pay the higher amount which puts a dent into our deposit but as we are both buying a residential property together I wasn't sure if the rules were different as the rented property already exists and I paid stamp duty on it at the time?

Thanks in advance for your help.

Bluebirdman_of_Alcathays · 1 September 2016 at 1:25PM

The higher amount. If you dispose of your rental property within 3 years you can claim back the additional £10k

Southernman · 1 September 2016 at 1:47PM

That's a massive shame. I suppose I better save even more wildly than I already am to build up equity and funds for stamp duty/solicitors fees

Bluebirdman_of_Alcathays · 1 September 2016 at 1:59PM

Or sell the rental

[Deleted User] · 1 September 2016 at 2:39PM

You and your partner will pay the normal stamp duty if you are replacing your main residence.

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

teddysmum · 1 September 2016 at 2:53PM

Bluebirdman_of_Alcathays wrote: »

Or sell the rental

or buy somewhere cheaper.

morwok · 1 September 2016 at 2:57PM

As Cherry Gale say if you are replacing your main residence you should be fine my solicitor initially advised us incorrectly.

See some scenarios below:
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

and the final Guidance note which is a bit more complex.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf.

Southernman · 1 September 2016 at 3:06PM

Now I'm really confused. I rang the stamp duty 'team' who work for the government and he informed me I had to pay the higher rate as I was purchasing a second home.

I also thought that because I was replacing my residential property we would be exempt but apparently not?

He said that my partner could buy it in his name and be exempt but that puts my deposit at risk as we're not married. If we do marry however, we are classed as one unit and therefore once again not exempt!

Southernman · 1 September 2016 at 3:11PM

I could sell the rental but I have an emotional attachment to it. It also brings in a good rental yield as it is city centre location. There are also low maintenance costs compared to a house so fingers crossed not a lot goes wrong.

morwok · 1 September 2016 at 3:24PM

I am still fairly sure it will count as you replacing your main residence but I could be wrong.

Depends what they class as Civil partner too...

Example 19:
B and C are purchasing a property together. This will be B’s first property, but C owns another property that she is not selling. For C, this will be an additional property as, at the end of the day of the transaction, she will own two properties and is not replacing a main residence. Therefore, the higher rates of SDLT will apply.

The Final guidance note should confirm but is much more complicated to unravel.

Pixie5740 · 1 September 2016 at 3:26PM

I assume that it's only your partner's name on the deeds of your current home so you are not selling your main residence (because you don't own it therefore cannot sell it) to replace it with another main residence therefore the higher rate of SDLT is payable. If you'd been married then it would have been a different story as married couples can only have one main residence.