How long must roperty be main residence for stamp duty?

I currently own 2 properties


Property A - let out


Property B - main residence


Property C - Want as new main residence £495,000


From my calculations if I sell property B to buy property C the stamp duty is £14,750 because I am selling main residence and acquiring new main residence.


If I sell property A to buy property C the stamp duty would be £29,600 because property A isn't main residence.


Is that correct?


If so, can I move from property B to property A so it becomes main residence and then sell property A to buy property C?


If so, is there a minimum period that A has to be my main residence before selling?

Replies

  • anearyaneary Forumite
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    Why would you go with option 3 surely that still means you pay the same stamp duty as option A £14750?
  • saajan_12saajan_12 Forumite
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    I don't know of and don't think there is an official minimum time period, it's upto HMRC as to what sounds plausible as an actual move as opposed to a token exercise for tax purposes. This means that if you try it and HMRC disagree with you, you may end up paying the extra stamp duty anyway, on top of the hassle of an extra move.

    Even if it does work, balance the saved stamp duty with the costs of an extra move
    -> cost of eviction of current tenants (court filing fees, potential rent loss if they stop paying rent)
    -> rent void between when tenants are evicted and new tenants move into house B
    -> extra lettings agent, tenant referencing etc costs
    -> extra removals costs
    -> redecoration of house A after tenant moves out, ready to sell. Assuming house B would be in good condition as you have been living there.
    -> Overlap in paying council tax and bills on two properties
  • JJGJJG Forumite
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    My understanding is you'll have to pay the extra stamp duty unless you sell both properties.
  • anearyaneary Forumite
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    JJG wrote: »
    My understanding is you'll have to pay the extra stamp duty unless you sell both properties.

    If you have multiple properties and you sell your main residence to buy a new main residence you don't pay the extra stamp duty on that transaction.
  • G_MG_M Forumite
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    JJG wrote: »
    My understanding is you'll have to pay the extra stamp duty unless you sell both properties.
    Your understanding is wrong.
    I currently own 2 properties

    Property A - let out

    Property B - main residence

    Property C - Want as new main residence £495,000

    From my calculations if I sell property B to buy property C the stamp duty is £14,750 because I am selling main residence and acquiring new main residence.

    If I sell property A to buy property C the stamp duty would be £29,600 because property A isn't main residence.

    Is that correct?
    Yes. (though I've not checked your maths, but assume you've based it on paying the additional 3% tax)
    can I move from property B to property A so it becomes main residence and then sell property A to buy property C?

    If so, is there a minimum period that A has to be my main residence before selling?
    There is no defined minimum period. It is a question of fact. HMRC would look at the precise circumstances and based on the facts, draw a conclusion.
    They may well take into account the possibility that your 'move' from B to A was nothing more than an attempt to [STRIKE]evade [/STRIKE]avoid tax.
    They may look at what has happened to property B. Is that now let out? on what length tenancy?
    They may take other factors into consideration.
  • UKSBDUKSBD Forumite
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    G_M wrote: »
    Your understanding is wrong.

    Yes. (though I've not checked your maths, but assume you've based it on paying the additional 3% tax)

    There is no defined minimum period. It is a question of fact. HMRC would look at the precise circumstances and based on the facts, draw a conclusion.
    They may well take into account the possibility that your 'move' from B to A was nothing more than an attempt to [STRIKE]evade [/STRIKE]avoid tax.
    They may look at what has happened to property B. Is that now let out? on what length tenancy?
    They may take other factors into consideration.


    Living in Property B at the moment.


    The plan is to move back in to property A, spend a couple of months doing some work on Property B and then let that out B.
    (tenant in A is happy to move out on a months notice)


    After Property B has been let, then put property A on the market and buy property C


    As they go by fact rather than a timescale I'm assuming we will end up paying the lower Stamp Duty?


    Hopefully, timescale between moving out of B and buying C will be 4 - 6 months
  • saajan_12saajan_12 Forumite
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    UKSBD wrote: »
    As they go by fact rather than a timescale I'm assuming we will end up paying the lower Stamp Duty?

    They go by 'fact' meaning they look at the reality and intentions of your actions, not whether you technically moved for 5 seconds. I imagine things like the below would be considered
    * do you change your correspondence address on bills, DVLA, banks
    * do you change services e.g. GP, dentists, bank branch, library acc to be local to property A
    * do you change jobs or kids schools to be within reasonable distance from property A (if applicable)
    * do you move all furniture and belongings to property A
    * is property A suitable in size etc or clearly a short term solution
    * do you begin searching for / purchasing property C before the move to property A is complete
  • edited 30 June 2017 at 4:37PM
    UKSBDUKSBD Forumite
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    edited 30 June 2017 at 4:37PM
    saajan_12 wrote: »
    They go by 'fact' meaning they look at the reality and intentions of your actions, not whether you technically moved for 5 seconds. I imagine things like the below would be considered
    * do you change your correspondence address on bills, DVLA, banks
    * do you change services e.g. GP, dentists, bank branch, library acc to be local to property A
    * do you change jobs or kids schools to be within reasonable distance from property A (if applicable)


    They are only 6 miles apart, change of correspondence address; bills, DVLA, bank, etc. will be done, everything else stays the same

    saajan_12 wrote: »
    * do you move all furniture and belongings to property A
    * is property A suitable in size etc or clearly a short term solution


    Most of the furniture from Property A is still in storage from when we moved from A to B 3 years ago.
    We lived in property B for 20+ years

    saajan_12 wrote: »
    * do you begin searching for / purchasing property C before the move to property A is complete


    Won't start looking for Property C until Property B is let out as that will be one of the deciding factors on what we spend on C.
    Edit to add: We may be living back in Property A for 6 months or more.
  • G_MG_M Forumite
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    You appear to be trying to persuade us to tell you that the additionalSDLT will not apply.

    We don't know. Only HMRC can decide.

    All we are trying to do is advise you there's no strict rule governing how long you must reside somewhere, there is simply an interpretaion of the facts.

    We've suggested some variables that might be taken into consideration, but cannot predict the conclusion HMRC will reach.
  • 00ec2500ec25
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    the assessment of "main" residence by HMRC is based on many factors some of which have already been tested in court as part of capital gains tax cases in respect of assessing what is meant by "main residence" for the purposes of private residence relief claims

    the key case law principle is summed up in the phrase: degree of permanence, degree of continuity or expectation of continuity

    live somewhere briefly, pending moving to another place, then there is no expectation of continuity or degree of permanence, it is simply temporary occupation of the property, not "residence". The key fact is that there is no minimum period, nor are there hard and fast rules. HMRC judge each instance on the specific facts of each case. Some of the many issues you could face include:
    a) what will trigger HMRC to take an interest in your case, will you be
    noticed or will you slip under the radar.
    b) is living in A in reality merely temporary occupation because B is having works carried out prior to it being let and therefore no degree of permanence in respect of A or expectation of continuity as B is to be let and C purchased as the real home as soon as B is let.

    https://www.taxinsider.co.uk/1222-Private_Residence_Relief_Is_It_A_Residence.html
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