Stamp Duty Explanation

james_37

I would really appreciate some clarification on the new stamp duty rate & whether it will apply to my situation.

My partner and I are planning on purchasing a property together imminently. She owns 2 properties which are rented out and that she has never lived in. One is on the market and her intention is to sell both eventually.

We both live in a house I owned jointly with my parents (my parents don't live in the house). For the last year or so my partner has been paying rent to my parents. Before that she rented by herself in the area she works in. I have just sold my equity in this house to my parents, so will be entering into this purchase with no equity in any property. The house we purchase together will be our only and main residence.

I am confused whether the additional stamp duty will apply despite reading resources on the web and thought someone here with knowledge of the intricacies could help!

Many thanks

anselld

Your partner will own three properties. You are not replacing a main residence. Why would it not apply?

G_M

One of the 2 joint owners (your partner) owns other property. The 2nd property SDLT will therefore apply.

If you bought the property in your sole name, it would not apply, since you do not own any other property.

If you are married, it will make no difference whether you buy in you sole name or jointly, since your spouse owns other property.

james_37

I read an example where someone owns 2 properties - one they live in and one they let out. They are selling the one they live in and buying a new property to live in, and they weren't due to pay the extra stamp duty.

I was confused as to the rationale behind the above situation avoiding any charge, and someone buying their first & only residence needing to pay the charge. Can anyone briefly explain that to me? Thanks for taking time to answer by the way.

Doozergirl

james_37 wrote: »

I read an example where someone owns 2 properties - one they live in and one they let out. They are selling the one they live in and buying a new property to live in, and they weren't due to pay the extra stamp duty.

I was confused as to the rationale behind the above situation avoiding any charge, and someone buying their first & only residence needing to pay the charge. Can anyone briefly explain that to me? Thanks for taking time to answer by the way.

They are allowed to replace a main residence with a main residence.

The additional tax is to deter people from increasing their portfolio. Those with existing portfolios can't be retrospectively hit. Those who remt themselves but own other property still own more than they 'need'.

Sell the lot and you save the SDLT. Move into one of the BTLs and save the SDLT.

james_37

Thanks for your reply. Unfortunately her properties are in a completely different part of the country from where she works so have never been suitable for her to live in, and that she now owns two is down to unfortunate circumstances.

To be clear, I don't in principle oppose this type of tax - however it's interesting given my above example's exemption how our situation is particularly unfortunate, and how it seems unfairly punitive given the rationale behind the changes in Stamp Duty.

Kynthia

james_37 wrote: »

Thanks for your reply. Unfortunately her properties are in a completely different part of the country from where she works so have never been suitable for her to live in, and that she now owns two is down to unfortunate circumstances.

To be clear, I don't in principle oppose this type of tax - however it's interesting given my above example's exemption how our situation is particularly unfortunate, and how it seems unfairly punitive given the rationale behind the changes in Stamp Duty.

It's designed to increase the costs for those increasing the number of properties they own. That's what you are both doing.

davidmcn

If it could be avoided by people merely "having the intention" to sell their excess properties then surely everybody would claim that, wouldn't they? You avoid by actually selling the properties first.

james_37

Kynthia wrote: »

It's designed to increase the costs for those increasing the number of properties they own. That's what you are both doing.

Hi. In my situation, even if my partner sold one of her properties we would still be liable for the additional tax on this new & only residence. Unlike the example I gave above. Do you better understand my point now?

davidmcn wrote: »

If it could be avoided by people merely "having the intention" to sell their excess properties then surely everybody would claim that, wouldn't they? You avoid by actually selling the properties first.

Yes. I don't think I have argued any differently.

AdrianC

james_37 wrote: »

Hi. In my situation, even if my partner sold one of her properties we would still be liable for the additional tax on this new & only residence. Unlike the example I gave above. Do you better understand my point now?

Because your partner is not replacing her current main residence.
In the example you give, they are.

james_37

AdrianC wrote: »

Because your partner is not replacing her current main residence.
In the example you give, they are.

I'm not saying I don't now understand the wording or application of the duty! It has been carefully explained by other replies in this thread. I'm not disputing it.

I was replying to Kynthia who suggested the rationale was to tax those increasing their number of properties (when this isn't universally the case). I was also interested in opening a discussion regarding the rationale behind the tax given the two examples where both aren't increasing their portfolio, and the one liable for the additional duty is buying their first residence. That's all. I thought this would probably be a reasonable forum to see what people thought about this.