Stamp duty... Help!!

Charlieaston

I was wondering if anyone is able to help?

I do not own a residential property, I live with my Mum. My first purchase was a buy to let, which I paid standard stamp duty on as it was my only property. My second property was also a buy to let. This was charged at the higher rate. I have now sold and am replacing my initial property with a bigger buy to let. I have been told that this will be charged at the higher rate stamp duty because it is not my only property or my main residence. BUT, my argument is that I have replaced the initial property which was classed as my main property in terms of stamp duty. If I pay higher rate this means that I will not have any properties which have been charged at the standard rate. Surely I should be allowed one "main residence" in terms of stamp duty, despite the fact that they are both on buy to let mortgages?

3mph

Is not your Mum's house your main residence?

bob_bank_spanker

Your main residence is where you live.

00ec25

Charlieaston wrote: »

Surely I should be allowed one "main residence" in terms of stamp duty, despite the fact that they are both on buy to let mortgages?

in what way do you reside in either of the 2 properties you own which are in fact occupied by your tenants?

residence means what it says. You are not replacing a main residence, ypu wne from 0 to 1 property (thus paid standard rate), then, whilst retaining ownership of that, you subsequently bought an additional property going from 1 to 2 (higher rate) then 2 to 1 (no SDLT on a sale) and now you are again from 1 to 2 (HR), none of which have been your residences.

saajan_12

Charlieaston wrote: »

I was wondering if anyone is able to help?

I do not own a residential property, I live with my Mum. - okay, so that's your main residence. My first purchase was a buy to let, which I paid standard stamp duty on as it was my only property. - correct,
because it was your ONLY property, not because it was your 'main residence'. My second property was also a buy to let. This was charged at the higher rate. I have now sold and am replacing my initial property with a bigger buy to let. I have been told that this will be charged at the higher rate stamp duty because it is not my only property or my main residence. BUT, my argument is that I have replaced the initial property which was classed as my main property in terms of stamp duty. - no, it was your first property, nothing to do with main residence. If I pay higher rate this means that I will not have any properties which have been charged at the standard rate. - indeed, it's irrelevant what rate a property was previously charged at. The concept of stamp duty is a charge when you buy, which is not refunded when you sell.
The more times you buy, the more you pay. Surely I should be allowed one "main residence" in terms of stamp duty, despite the fact that they are both on buy to let mortgages? - the mortgage is irrelevant.

Higher rate SDLT is due on any purchase where you already own a property unless you are replacing your main residence. The concept of stamp duty was for each time you purchase, with no refund on sale. There is a caveat for people moving house on the additional 3% portion, not for changing your BTL portfolio.

What you think is fair aside, that's how it is, there's no grey area.

G_M

As others have said, your main residence is your mum's house.

So there is no 'main residence' relief available on your latest purchase.

magn8p

Echo other views stated here. Main residence == The one you buy to live in.

As an aside, have you considered the change in laws about removing tax relief for the mortgage interest? By 2020 you will have to pay tax for every penny of rent you receive. Check - https://www.which.co.uk/money/tax/income-tax/guides/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained

ACG

When you buy a residential home for yourself, you will pay standard rate as far as I am aware.

But this BTL purchase will 100% incur higher rate stamp duty.

accidental_landlord_2

You'll presumably be purchasing via a solicitor who will know the exact answer?

saajan_12

magn8p wrote: »

As an aside, have you considered the change in laws about removing tax relief for the mortgage interest? By 2020 you will have to pay tax for every penny of rent you receive. Check - https://www.which.co.uk/money/tax/income-tax/guides/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained

No, you pay tax on profit, defined as rental income less non financing expenses. Then you get upto 20% tax relief on mortgage interest (from 2020, more until then). So if you are a basic rate then the result is you don't pay any tax on the financing portion, if you are higher rate then you pay less than your full rate on the fianncing portion.

ACG wrote: »

When you buy a residential home for yourself, you will pay standard rate as far as I am aware.

But this BTL purchase will 100% incur higher rate stamp duty.

No, when OP buys a residential home they will presumably not be selling another main residence (as they live with mum). As OP already owns property, the new purchase will be at higher rate, even if they move in.


It's not helpful to sprout wildly incorrect statements.

ACG

saajan_12 wrote: »

It's not helpful to sprout wildly incorrect statements.

Ouch! I did say as far as I am aware - I never actually commited myself 100%.

I have just have a look on the HMRC website and you are correct.


https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties