Stamp Duty - Renting

theFlash

We currently rent. We are selling another house we used to live in. The plan is to buy another somewhere else, for our use only, whilst continuing to live in the rental. We will only buy once our other house is sold.

Would we have to pay any special additional rates of stamp duty on the new purchase?

G_M

How many properties will you own at the end of the transaction ie on the day you Complete your purchase?

theFlash

We would own only one at the end, in fact there will/may be a short time we will own none.

It seems an obvious question, but there some confusing articles I'm reading, and my conveyancers have put on their quotation a much larger stamp duty bill than I imagined - matching a second home transaction. I've just called the HMRC and they says if you own one at the end, even if you rent another, then its still just normal stamp duty you pay. Phew.
Not sure what my conveyancers were thinking.

saajan_12

If the total number of properties owned by your or or partner (assuming married) never exceeds 1, then you never have a 'second home' so additional rate Stamp Duty is NOT due. You just pay the normal stamp duty as with any purchase.

00ec25

the conveyancers are confused becuase you are not REPLACING your old main home with your new purchase as you will continue to live in the rental as your main home

nonetheless, if you sell before you buy, you will pay the standard rate

if on the other hand you buy before you sell then, and only then, will you simultaneously own 2 properties and the new purchase is not a replacement so the higher rate would apply. However, it sounds like you expressly will not let that happen, so you'll only be liable for normal rate as you'll sell before you buy.

Mutton_Geoff

00ec25 wrote: »

if on the other hand you buy before you sell then, and only then, will you simultaneously own 2 properties and the new purchase is not a replacement so the higher rate would apply

But would be refundable if you sold the second property within 3 years. In any case, living in rental, selling one, buying another only attracts the single property tax.

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

G_M

00ec25 wrote: »

...
if on the other hand you buy before you sell then, and only then, will you simultaneously own 2 properties and the new purchase is not a replacement so the higher rate would apply. ....

Nearly. There now seems to be a grace period in addition to the 3 year period to reclaim:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

In the case of a disposal of a previous main residence following a purchase of a new main residence, the land transaction return will have been made based on the higher rates of tax, unless the disposal happened before the date on which the land transaction return must be submitted. In such a case the land transaction return should be completed as if the higher rates do not apply.

The Land Transaction Return has to be submitted within 30 days of Completion so that seems to be the grace period.......

SDLT_Geek

If, as planned, OP sells before buying, then the surcharge will not apply, whatever the new property is to be used for. The posts above make that point.

I diagree with the posts which say that if the sale is after the purchase the surcharge is recoverable. The problem is that OP is to continue to live in the rented house. So OP will not live in the new property as an only or main residence. So the replacement exception will not apply.

00ec25

G_M wrote: »

Nearly. There now seems to be a grace period in addition to the 3 year period to reclaim:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

The Land Transaction Return has to be submitted within 30 days of Completion so that seems to be the grace period.......

nearly, OP is not replacing their main home,

OP's main home remains the rental: no replacement = no refund

G_M

00ec25 wrote: »

nearly, OP is not replacing their main home,

OP's main home remains the rental: no replacement = no refund

You're right. I was nearly right.

I got distracted by Mutton Geoff talking about a refund if OP sold within 3 years (which implies replacing a main home).