First Time Buying, but...

Billy_Shears

Hi All, many thanks in advance for any help offered.

So the situation is this. I am living in a rented house and looking to buy. I have never bought a place before, and therefore never had a mortgage. So in that respect I would be a first-time buyer.

However, 9 years ago I inherited 50% of a small house with my sister. It is rented out and the money split between my sister and myself.

If/when I buy a new house, which will be my main residence, will I be liable to the 2nd home stamp duty? The reason I ask is I have seen various clauses such as...

"For someone owning a second home before April 2016, the higher rates of stamp duty should not apply if they wish to move house. In this case as long as an individual has replaced their main residence at the end of the moving process, final stamp duty liability will be applied at the normal rate."

So my current main residence is the one I live in which I rent. If I buy I will be replacing my main residence, so am I liable for the extra Stamp Duty?

If that is the case, would it be beneficial to buy a really cheap property - live in it briefly, and then buy a new main residence?


I have also read...

"Stamp Duty does not apply to inhertited property so there is no SDLT to pay. If someone who has inherited a property then goes on to purchase another home this could be counted as an additional property. If however someone has inherited a small share (50% or less) in a single property within 36 months prior to purchasing a new property, they should not be liable for the higher SDLT rate."


Why the 36 month clause? What relevance does that have?

G_M

Why does the reason for the clause matter? If you want to debate/discuss, go to the discussion forum.

If you want to know if you will be liable for the additional SDLT, the answer is clearly yes.

AdrianC

Billy_Shears wrote: »

However, 9 years ago I inherited 50% of a small house with my sister. It is rented out...

If/when I buy a new house ... will I be liable to the 2nd home stamp duty?

Yes. That simple. Unless your ownership share is worth <£40k.

"For someone owning a second home before April 2016, the higher rates of stamp duty should not apply if they wish to move house. In this case as long as an individual has replaced their main residence at the end of the moving process, final stamp duty liability will be applied at the normal rate."

So my current main residence is the one I live in which I rent. If I buy I will be replacing my main residence

No, because you aren't replacing a main residence you OWN.
You now own one property. You will finish up owning two properties.

so am I liable for the extra Stamp Duty?

Yes.

If that is the case, would it be beneficial to buy a really cheap property - live in it briefly, and then buy a new main residence?

Unless you're buying something really rather expensive, it's probably cheaper just to pay the SDLT. It's certainly a lot less hassle. Or sell the rental.

I have also read...

"Stamp Duty does not apply to inhertited property so there is no SDLT to pay.

You aren't paying SDLT on the inherited property.

If someone who has inherited a property then goes on to purchase another home this could be counted as an additional property. If however someone has inherited a small share (50% or less) in a single property within 36 months prior to purchasing a new property, they should not be liable for the higher SDLT rate."

Why the 36 month clause? What relevance does that have?

Ask George Osborne. But it's academic anyway, since you're way outside that window.

amateur_house

I find this new stamp duty tax very confusing too, and there are so many clauses to it, it is difficult to know if you are liable for it. I read your post as saying that the clauses (which make it difficult to know whether you are liable for it) were the reason you were asking, not that you were asking what the reason for the clauses is.

Sorry I can't give any advice, except that if you do go ahead and buy then your solicitor will be the best person to ask. I am in the process of buying currently and my solicitor has sent some guidelines on it. I unfortunately will have to pay it. I wish I'd understood it better when it was announced though as I would have made sure I bought before the 1st April deadline. At the time, last November, there was a big fanfare about how this would impact buy to letters, so I assumed, wrongly, it wouldn't affect anyone who was buying a house to live in themselves.

AdrianC

amateur_house wrote: »

I find this new stamp duty tax very confusing too, and there are so many clauses to it, it is difficult to know if you are liable for it.

Not really. It's very straightforward.

There are a couple of minor omissions from that, yes - <£40k value in the other propert(y/ies), mainly.

Billy_Shears

Ok, thanks very much guys.

To be clear; I was asking if I would be liable for the 2nd home tax in my situation as it isn't explicit (at least in my opinion) as to whether or not replacing a main residence includes those who rent or not.

My question about the 36 months clause for inheritors was more a ponderance, so apologies if it was in the wrong place.

Cheers,

Billy

amateur_house

AdrianC wrote: »

Not really. It's very straightforward.

There are a couple of minor omissions from that, yes - <£40k value in the other propert(y/ies), mainly.

Yes but there are exemptions in some cases, from this page https://www.hughjames.com/news/comment/2016/05/stamp-duty-tax-marriage-divorce/#.WCexWNSLSt8

"There are exemptions from the additional rates where a married couple (or civil partners) separate and divorce when it will be possible for them to buy another property and pay the standard rates despite still owning an interest in the matrimonial home. In this instance, there must either be a separation agreement; Court Order or a permanent desire to separate."

But it all seems very complex to me, getting court orders etc. I think a lot of people will just pay it (as I am doing) rather than go through such a convoluted process.

Sorry OP, this isn't really relevant to your original question.

caronoel

Billy_Shears wrote: »

Ok, thanks very much guys.

To be clear; I was asking if I would be liable for the 2nd home tax in my situation as it isn't explicit (at least in my opinion) as to whether or not replacing a main residence includes those who rent or not.

My question about the 36 months clause for inheritors was more a ponderance, so apologies if it was in the wrong place.

Cheers,

Billy

You already own 50% of a property, so you will be liable to pay the crude 3% additional tax originally imposed by Osborne to punish property investors.

Watch out for potential changes in Hammonds autumn speech in a few weeks. Don't hold your breath though