New House Stamp Duty Confusion!

AEP

My fiance and I are looking to purchase our first home together and have just reserved a new build property (leasehold) which will be completed around May 2018.

We have just been informed by our solicitor that due to the fact my fiance already owns a property which he lets out (there is no possibility of us being able to live there as we are both military and live away from home) we are now liable to the higher rate stamp duty which will be in the region of £12,000!!

Our confusion stems from the fact that 2 of our friends, who also own an investment property, also recently purchased a new home but due to the fact they sold the property they lived in, they didn't have to pay the higher rate. We don't own a main residence to sell as we live on base during the week and with his parents at the weekends.

So because we don't own a "main residence" that we will be selling like they did, we now have to pay £8,000 more than someone who also owns a buy to let, but sold the house they lived in.

Any help to clear this up is greatly appreciated!

therealbane

Yes this is correct. I'm in the exact same situation. It seems to me that they are again penalising the middle class with no desire to go after the people sitting on 100 BTL properties.

00ec25

AEP wrote: »

How ridiculous. I'm a bit speechless at how moronic this is!

why?

you own a property from which you derive an income not use it as a home

you now wish to buy a home and therefore increase your property owning empire by +1

the higher rate SDLT is charged on the purchase of an additional property. Your friends did not increase the total number of properties they owned, they replaced like (a home) with like (a new home)

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

if you want to play the "it's ridiculous game" and still feel hard done by, then consider this, because you are in the military your finance will NOT have to pay Capital gains tax when he sells the property because, if he has done things correctly, he will be entitled to claim exemption on the basis he is living in job related accommodation and the sale of the property he owns is therefore exempt. An "ordinary" person who not get that concession.

G_M

Is there not an exemption for forces living away?

Seem to vaguely recall but can't be bothered to look it up. Check the statute?

AEP

Thanks for the info, ill have a look into the Military exemptions however I'm not hopeful!

Thrugelmir

AEP wrote: »

How ridiculous. I'm a bit speechless at how moronic this is!

Then people complain that high prices are to high and cannot afford to buy. Shelter is like heat, clothing and food. Everybody needs it.

gingercordial

AEP wrote: »

My fiance and I are looking to purchase our first home together and have just reserved a new build property (leasehold) which will be completed around May 2018.

We have just been informed by our solicitor that due to the fact my fiance already owns a property which he lets out (there is no possibility of us being able to live there as we are both military and live away from home) we are now liable to the higher rate stamp duty which will be in the region of £12,000!!

Our confusion stems from the fact that 2 of our friends, who also own an investment property, also recently purchased a new home but due to the fact they sold the property they lived in, they didn't have to pay the higher rate. We don't own a main residence to sell as we live on base during the week and with his parents at the weekends.

So because we don't own a "main residence" that we will be selling like they did, we now have to pay £8,000 more than someone who also owns a buy to let, but sold the house they lived in.

Any help to clear this up is greatly appreciated!

You don't have to pay it. You can easily save yourself the £8,000 by simply selling your rental property, thus releasing it back to the market so that a first time buyer can have a shot at owning it. This is exactly what the law is trying to achieve so it is working well here (the fact that your friend didn't get caught for the tax is the real failing).

getmore4less

G_M wrote: »

Is there not an exemption for forces living away?

Seem to vaguely recall but can't be bothered to look it up. Check the statute?

You may be thinking of the CGT exemptions.

Although they might end up paying more SDLT the CGT on the rented place will be reduced.

they need to look at the implication of changing PPR staus on that place if they buy another one as their main residence.