What if the home I am buying will be!my main residence?

w00519772

I was reading about the new stamp duty rules: http://www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/#qWJlsSA2pe2gYre0.97 and specifically the question: What if the home I am buying will be!my main residence?

How does this work in the scenario where you buy a new property; move house to the new property and then rent out your existing property? I assume you would have to pay the higher rate of stamp duty? On Zoopla it says:

"A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."
But replacing your main!residence means the last one (or at least a 'major interest' in it) will need to be disposed of!(eg,!SOLD or GIFTED).!If!

I guess "dispose" does not extend to renting out your current property and moving to the new property?

glasgowdan

Correct...

w00519772

glasgowdan wrote: »

Correct...

I was reading about Capital Gains Tax here and specifically this tax year: https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances

The way I understand this is:

1) If you buy a property and move in to it (renting out your old property), then you pay 18% or 28% tax.
2) If you own a property and you buy another property; renovate it and sell it (without moving into it), then you pay: 10% or 20% tax.
3) If you buy a house move into it and sell your old house then you do not pay any CGT because of Private Residence Relief.

Have I understood this correctly?

G_M

w00519772 wrote: »

....

I guess "dispose" does not extend to renting out your current property and moving to the new property?

:rotfl:


Nice try!

w00519772

How does it work with a Private Limited Company. Say you own your own property and then purchase a property, which is then owned by a property. The Ltd company then owns the house (one house). Do you still pay the additional stamp duty?

I am just trying to fully understand the financial implications before I consider doing this.

00ec25

w00519772 wrote: »

I was reading about Capital Gains Tax here and specifically this tax year: https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances

The way I understand this is:

1) If you buy a property and move in to it (renting out your old property), then you pay 18% or 28% tax.
2) If you own a property and you buy another property; renovate it and sell it (without moving into it), then you pay: 10% or 20% tax.
3) If you buy a house move into it and sell your old house then you do not pay any CGT because of Private Residence Relief.

Have I understood this correctly?

please do a lot more reading !

1. the CGT rate when you sell the rental property would be 18 and or 28% depending on your "total income" that tax year of the sale and also obviously whether you have a net taxable gain to start with having claimed any available relief and your allowance (per owner)

2. that would be property trading/developing and is subject to income tax, not CGT

3. correct. the sale would be exempt from CGT. Whether you buy another property or not is irrelevant.


when reading it is often best to start with the HMRC information rather than journalists abridged versions. Yes the HMRC info can be heavy, but it is complete...

https://www.gov.uk/capital-gains-tax/overview

https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64200c

00ec25

w00519772 wrote: »

How does it work with a Private Limited Company. Say you own your own property and then purchase a property, which is then owned by a property. The Ltd company then owns the house (one house). Do you still pay the additional stamp duty?

I am just trying to fully understand the financial implications before I consider doing this.

read the SDLT guide rather than the bits and pieces which other websites have in isolation

https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-for-purchases-of-additional-residential-properties

companies are at Chapter 5 and question 24 will be relevant!

w00519772

I have a few questions:

1) I was reading this: https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1547862. This is implying that you can setup a limited company to buy a second property without paying Stamp Duty. Surely that is not right?

2) What are the rules for limited companies? I believe in order to be exempt; the company has to own at least 15 properties. Is that correct?

I am just trying to understand what my options are if I wanted to move to another city. I own one property at the moment (the property I live in).

00ec25

w00519772 wrote: »

I have a few questions:

1) I was reading this: https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1547862. This is implying that you can setup a limited company to buy a second property without paying Stamp Duty. Surely that is not right?

2) What are the rules for limited companies? I believe in order to be exempt; the company has to own at least 15 properties. Is that correct?

I am just trying to understand what my options are if I wanted to move to another city. I own one property at the moment (the property I live in).

it says nothing of the sort and it predates the higher rate SDLT anyway. Why are you ignoring the actual tax rules from HMRC websites for which you have already been given the links yet appear not to have read?

you have already been given the answer to Q2 in my previous post.

avoiding SDLT but then ending up owning a company which is being charged much higher financing rates than you'd be, and is taxed on profit before you get it and the money is taxed again as your now personal income is an "excellent" idea.

If you want to persist in exploring ways to (legally) avoid tax then pay for professional advice before your amateur attempts bite you. You need to balance SDLT, CGT and income tax which so far you have failed to do with your focus on SDLT

davidmcn

w00519772 wrote: »

1) I was reading this: https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1547862. This is implying that you can setup a limited company to buy a second property without paying Stamp Duty.

Apart from the fact that that isn't true, I'm not sure why you think it implies it - I can't see anything in that thread about stamp duty?

w00519772

davidmcn wrote: »

Apart from the fact that that isn't true, I'm not sure why you think it implies it - I can't see anything in that thread about stamp duty?

Thanks. Agreed. I think I must of posted the wrong link. I have read a lot of articles about this recently.