Stamp Duty Help please

robbay

Hi,


Currently own a house worth £140k with £90k equity and was planning on taking £45k equity out for deposit on a second house costing £300k which would be our main residence with our old house a BTL. We knew we would have to pay £5k Stamp duty and we can just about manage this but here in lies the problem. Financial Advisor says that is all the SD to pay, spoke to Solicitor who said we would have to pay more like £14k so we spoke to a second solicitor who says we should only have to pay £5k but we might have to pay £14k and get a refund from the tax man.


As you can imagine this is all very stressful as we have had an offer accepted based on the FA advice and now this has come up.


Any help gratefully received,


Thanks,


Rob

Bluebirdman_of_Alcathays

The SDLT you will pay is undoubtedly £14k. You will only get a refund of £9k if you sell house 1 within 3 years of buying house 2.

anselld

You have to pay £14k SDLT as you are buying a second home.
If you sell the old home within 3 years you will get the surcharge refunded (£9k).

AnotherJoe

Get a new FA, the current one knows sweet FA and I wonder what else he is misadvising you about?

And you only get the refund if you sell the BTL within 3 years (as stated by other posters) not as a matter of course as the second solicitor indicates (or you imply)

With such a slapdash approach to the whole thing, and being on the edge with costs, are you aware what is involved being a landlord? The financial implications? The risks? The costs? The legal requirements?

robbay

Thank you all for your advice. In response to AnotherJoe the second solicitor said we should be ok but might have to claim it back and nothing was implied by me. Also not sure about the slapdash bit as a lot of thought has gone in to this decision including seeking expert advice.

Thrugelmir

robbay wrote: »

Currently own a house worth £140k with £90k equity and was planning on taking £45k equity out for deposit on a second house costing £300k which would be our main residence with our old house a BTL.

Will you incomes pass the affordability criteria to support a mortgage debt of £350k?

Pixie5740

The additional SDLT for purchasing additional residential properties has been discussed numberous times on the forum before on a near daily basis.

The higher rate SDLT is given on the .gov.uk website: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

HMRC produced this guidance note:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf

So it's quite worrying that your FA and a solicitor are giving you duff advice.

AnotherJoe

robbay wrote: »

Thank you all for your advice. In response to AnotherJoe the second solicitor said we should be ok but might have to claim it back and nothing was implied by me. Also not sure about the slapdash bit as a lot of thought has gone in to this decision including seeking expert advice.

Then unless you told the second solicitor you were planning to keep your BTL for only a couple of years or so and certainly sell before three had passed, they had no grounds at all to say you could claim it back. None, zero nada, nil.

You also are admittedly stretched to the limit ( cannot afford the extra £9k) yet there will be many costs involved in having a BTL. How much buffer do you have set aside to pay for those?

And you've somehow found both a solicitor and an IFA who don't understand the most basic facts of stamp duty amd have given you wholly misleading information upon which your financial plans have seemingly been based.

I stand by slapdash.

robbay

Update: The solicitor who claims we can pay the money back has sent an email stating:


With regard to the tax (Stamp Duty) I confirm as discussed that as from 1st April this year the Inland Revenue charge an additional 3% for a second property although this is not applicable to a main residence


In your case I note instructions that you will be letting your current property and the new property will be your main residence


The additional duty should not therefore be payable


However the IR will often require the additional duty to be paid and then require you to produce evidence to reclaim the payment after completion


If instructed I will liaise with the IR and check their requirements


Please advise as after reading about this I think he is wrong.


Thanks,


Rob

p00hsticks

robbay wrote: »

Please advise as after reading about this I think he is wrong.

He's wrong. If you are purchasing a second or subsequent property you are only exempt from paying the higher SDLT if you are REPLACING your main residence - i.e. you are selling the house you currently live in and intend to live full time in the house you are purchasing.

You could point him to the government website here to support this (although why you should need to when he's supposed to be the 'expert' is another matter ....)

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

(N.B. We're all assuming that you live in England or Wales)

Pixie5740

The solicitor is wrong and why is he referring to HMRC as IR? The Inland Revenue dissolved in April 2005! He sounds out of touch. Email him the links I gave you and tell the solicitor to read them.