Avoiding Stamp Duty surcharge on second property

Bif

Hi all,

I live in employer owned accommodation during the week, and with parents at weekends. I own a property which I rent out and want to keep.

I now want to buy and live in a property with my GF (first time buyer - I realise this is irrelevant with regard to new SDLT rules). This will be my main residence, my previous one being my parents' house, so I am liable for the 3% SDLT surcharge.

We are looking at buying something for around £350k, resulting in an £18k SDLT bill.

What I'd like to know is, could we initially buy somewhere for say £150k, pay the £5k bill (3% surcharge as I will have gained a property), then sell it soon afterwards, buy for £350k, and only pay £5k on that (no surcharge as I will still have the same number of properties)?

How far could you go with this? Could you buy a <£40k property, live in it for a period of time, then trade up, avoiding the surcharge altogther?

I realise HMRC wouldn't look kindly on this but I'm just curious as to whether there are actual rules in place. Surely it has been covered somewhere; I have read the full guide and many forum threads and articles but couldn't find anything.

Mrs36

You admit yourself HMRC will take a dim view. Just pay what you owe - it is your choice to keep the rental property.

giddypenguin

You will need to keep the first property for at least 6 months.

You would need to factor into account estate agency fees (£2k?), extra legal fees and surveys.

It doesn't sound like you'll save much in the long run (if anything) and it'll be a load more stressful.

saajan_12

In order to show them as two separate transactions, you would need to actually live in the cheap property for enough time. The expenses involved in an extra move include
- EA fees (extra sale)
- legal costs (extra sale & purchase)
- mortgage valuation fee
- high mortgage interest / ERCs if you end up with a fixed deal
- normal stamp duty on cheap place (if above threshold)
- removals van / packing costs
- renovation costs to make the cheap place habitable
- time to reregister address, mail redirection
- time to view, searches, apply for mortgage
- time to pack/unpack
- time in renovating / cleaning cheap place to be habitable

Also you'd be hard pressed to find two properties in a similar area with sufficiently different values (so expensive property is high enough that the stamp duty makes enough of a difference to cover the standing costs).

Harryp_24

youre barely going to save money doing that probably end up paying more in the fees and ercs