SDLT and "disposal of the previous main residence"

RM1985

Seeking some further clarification on this post if possible...

I live in Wales and the properties in question are all in Wales.

Since my post, I've learnt that Wales is introducing Land Transaction Tax to take effect from 1st April 2018.

I originally thought this would be great, as under the Welsh proposals, there will be no stamp duty to pay if the house is worth less then £180,000. (Mine is)

However now I've read the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 which says:

8 - Replacement of main residence exception
(2) d) at any time during the period of 3 years referred to in paragraph (b) the sold dwelling was the buyer's only or main residence..."

So does this mean para 3.19A will not apply to me?
(para 3.19A = For purchases on or before 26 November 2018, there is a replacement of a main residence if ....That other dwelling must have been, AT SOME TIME, the only or main residence of the purchaser..."

I am REALLY confused.

SDLT_Geek

There is an article about this point here: http://www.telegraph.co.uk/tax/news/welsh-pay-english-stamp-duty-rule-may-abandoned/


As enacted the Welsh rules for Land Transaction Tax (effective for purchases in Wales completing on or after 1 April 2018) bring in the three year rules straight away, without the savings for completions by 26 November 2018 which 00ec25 refers to which apply to stamp duty land tax.


There is talk though of transitional provisions being introduced which will give a similar get out in Wales up to 26 November 2018.

RM1985

Thanks SDLT geek - I did see that article.

This could be a massive problem for me.

If the rule is that I must have lived in my previous main residence within the 3 years before the sale of my new main residence, (welsh guidance as per legislation quoted above?) then it means I'm right on the cusp, as I moved out spring 2015. (took years for me and ex partner to sort everything out legally) - so there's a chance I won't qualify for exemption.

If the rule is that I must have lived in my previous main residence AT ANY POINT PREVIOUSLY, (para 3.19A) of english guidance) as long as I buy my new main residence within 3 years of relinquishing my share of my old main residence (which I did in November 2017), then I'm fine.

I was going to try and complete after 1st April, but now I'm wondering if it's better to push for completion before 1st April?

Welsh government won't meet until 30th January it says so it seems a huge gamble to wait for their decision - if it;s negative I'd be running out of time to complete before 1st April.

SDLT_Geek

The link here: http://senedd.assembly.wales/ieIssueDetails.aspx?IId=20885&Opt=3 explains that at a meeting on 30/01/2018 it is to be proposed that the National Assembly for Wales approves the draft Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 in accordance with the draft laid in the Table Office on 8 January 2018.


The draft regulations laid on 8 January 2018 can be found here: http://www.assembly.wales/laid documents/sub-ld11347/sub-ld11347-e.pdf and an explanatory note here: http://www.assembly.wales/laid documents/cr-ld11378/cr-ld11378-e.pdf Here is an extract from the explanatory note:


“These Regulations make transitional provisions in respect of the introduction of land transaction tax (“LTT”) in Wales by the Land Transaction Tax and Antiavoidance of Devolved Taxes (Wales) Act 2017 (“the LTTA Act”). The provisions ensure that transactions which take place on or after 1 April 2018 receive treatment which is consistent, meaning that transactions are not taxed twice under LTT and Stamp Duty Land Tax (“SDLT”), or not taxed at all.


The Regulations also ensure that arrangements commenced prior to 1 April 2018 and for which certain reliefs (which exist in both regimes) were claimed will continue to be relieved under LTT (subject to certain conditions being met). Further, the Regulations will also provide for transitional rules for the purposes of determining whether a transaction completed on or before 26 November 2018 is a higher rates residential property transaction where a person‘s main residence is being replaced.”


I have had a look at the draft regulations, it is regulation 12 which effectively carries over into Land Transaction Tax the same transitional provisions as have applied under SDLT for the replacement of main residence exception to the higher rates (the 3% surcharge). So if the regulation is brought into effect as drafted, a buyer completing in Wales on or after 1 April 2018 but by 26 November 2018 can still in appropriate cases rely on an earlier sale of a dwelling anywhere in the world, even though that sale was more than three years before the Welsh purchase and even though the buyer last lived in that earlier property more than three years before the Welsh purchase.

GreenSnake

This new 3% stamp duty is going to make moving house much more complicated for everyone, not just landlords.

Previous to this, unless you bought a house over the stamp duty threshold, you could just buy the house you wanted. Move in. Then sell the house you'd left.

That's what I've always done. Never paid stamp duty in my life.
Now there's going to be a whole lot more hassle for everyone, paying this tax and asking for it back.

It will certainly put me off buying a house in the UK again.

marliepanda

GreenSnake wrote: »

This new 3% stamp duty is going to make moving house much more complicated for everyone, not just landlords.

Previous to this, unless you bought a house over the stamp duty threshold, you could just buy the house you wanted. Move in. Then sell the house you'd left.

That's what I've always done. Never paid stamp duty in my life.
Now there's going to be a whole lot more hassle for everyone, paying this tax and asking for it back.

It will certainly put me off buying a house in the UK again.

There are so many things in here that make no sense...

SDLT_Geek

For purchases in Wales from 1 April 2018 the new land transaction tax applies. HMRC issued some guidance on the transitional arrangements on Friday: https://www.gov.uk/government/publications/sdlt-to-land-transaction-tax-transitional-guidance