Stamp Duty on 2nd House

chattyj

Hi All, first time post please be kind.


Please let me explain my issue - I have a home I use to live in worth around 100K. 10 years ago I moved out and its still occupied by my friend and her kids. There is still a mortgage on it in my name.


I moved in with my current partner 10 years ago, and the mortgage on the house with currently live in is solely in her name. Now for the issue - We have sold the house we currently live in and have just (nearly) purchase a new house which will be in both our name, but because I still own another house I'm being hit by the 3% extra stamp duty. An extra 14K ouch..


I thought as we are selling our residential for a new one this wouldn't be the case. Is it because I'm not on her current mortgage?


Also, if we pay the extra 3% I'm told if I sell my house in 3 years I will get in back., but I haven't lived there for 10 years, would that be an issue


Any replies will be greatly appreciated.

G_M

You are not selling a property which is your main residence.

You currently own one property. After this purchase you will own two.

Therefore you are hit by the 2nd property SDLT.

booksurr

you are liable for the higher rate because you fail "Rule 3.1 Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence"

you do not own your current residence: "Rule 3.17A The major interest in the previous main residence must have been owned by the purchaser."

as for the rules regarding getting a refund ... these do give you a possible opportunity under which you would qualify for the refund

purchase it on/before 26 November 2018 and you will qualify if you also sell before then: "3.19A For purchases on or before 26 November 2018, there is a replacement of a main residence if, at any time before the purchase, the purchaser, or their spouse or civil partner, disposed of a major interest in another dwelling and the purchaser has not purchased another main residence in the period between that disposal and the new purchase. That other dwelling must have been, at some time, the only or main residence of the purchaser" That means, as it was once your main residence, and you have not owned another main residence since moving out of it, it still is, on paper, your "last" main residence and so the new place would be replacing the old place provided you purchased the new place before that date AND had already sold the old place by that date

purchase after 26 Nov 18 it is unlikely you will quality because of the timescale: "Rule 3.20 For purchases on or after 27 November 2018, there is a replacement of a main residence if, in the three years ending with the purchase, the purchaser disposed of a major interest in another dwelling and that other dwelling was, at some time in the three year period, the only or main residence of the purchaser" meaning you would not qualify since you had not lived in it since 2006 (10 years ago) so fail the 3 year rule. Also, you would need to delay purchase of the new place until after Nov 2018 which is clearly not going to apply to you

all is copiously explained in the rules...
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

chattyj

booksurr wrote: »

you are liable for the higher rate because you fail "Rule 3.1 Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence"

you do not own your current residence: "Rule 3.17A The major interest in the previous main residence must have been owned by the purchaser."

as for the rules regarding selling it... these do give you a possible opportunity under which you would qualify for the refund

sell it on/before 26 November 2018 and you will qualify: "3.19A For purchases on or before 26 November 2018, there is a replacement of a main residence if, at any time before the purchase, the purchaser, or their spouse or civil partner, disposed of a major interest in another dwelling and the purchaser has not purchased another main residence in the period between that disposal and the new purchase. That other dwelling must have been, at some time, the only or main residence of the purchaser" That means, as it was once your main residence, and you have not owned another main residence since moving out of it, it still is, on paper, your "last" main residence and so the new place would be replacing the old place provided you completed the sale of the old place on/before 26 Nov 18.

sell after 26 Nov 18 it is unlikely you will quality because of the timescale: "Rule 3.20 For purchases on or after 27 November 2018, there is a replacement of a main residence if, in the three years ending with the purchase, the purchaser disposed of a major interest in another dwelling and that other dwelling was, at some time in the three year period, the only or main residence of the purchaser" meaning you would not qualify since you had not lived in it since 2006 (10 years ago) so fail the 3 year rule



Many Thanks for the detailed reply, it seems to be talking about purchasing rather than selling. So does it mean I have to purchase the new house we are hopefully buying together before the 2018 date or sell the house that I use to live in 10 years ago for the date. Regards John

booksurr

chattyj wrote: »

Many Thanks for the detailed reply, it seems to be talking about purchasing rather than selling. So does it mean I have to purchase the new house we are hopefully buying together before the 2018 date or sell the house that I use to live in 10 years ago for the date. Regards John

ooops, that is a mistake in the bits I typed myself, the bits in italics are the direct quote

it means purchase the new place on/before 26 Nov 18 and sell the old place also before then - I have now significantly edited post #3 to confirm that

do read the guidance yourself, it is your tax, not mine that is at stake