Additional Stamp Duty Question

llyl

Hello,
I have a stamp duty question, really hope you can help or give me some advice…
My boyfriend owns his flat for a couple of years. And back on Dec 17, I bought my first flat as a “buy-to-let” property as I was living with him.
Last month, we decided that it is about time to get a bigger property as our family house and plan the future.

Our plan is to sell his house and get a joint mortgage together for this new house. However, I’m planning to keep my "buy to let" flat.
I’m not trying to avoid tax but I don’t think it makes sense if I have to pay additional property tax on the family house which is cost a lot more than my flat.
Since my primary resident has always been my boyfriend’s flat, I wonder:
1) Can my "buy to let" flat becomes my additional resident where I have to pay the additional property tax?
2) What stamp duty will we need to pay for the future family house?

Thank You in advance!

hazyjo

Did your lender know you weren't going to live in it? Did you get a BTL mortgage (very unusual with your first property), or consent to let? (Or neither?!)


Where are you registered for council tax/driving licence/electoral register?


Might make a difference as to your options.

Pixie5740

llyl wrote: »

Hello,
I have a stamp duty question, really hope you can help or give me some advice!!!8230;
My boyfriend owns his flat for a couple of years. And back on Dec 17, I bought my first flat as a !!!8220;buy-to-let!!!8221; property as I was living with him.
Last month, we decided that it is about time to get a bigger property as our family house and plan the future.

Our plan is to sell his house and get a joint mortgage together for this new house. However, I!!!8217;m planning to keep my "buy to let" flat.
I!!!8217;m not trying to avoid tax but I don!!!8217;t think it makes sense if I have to pay additional property tax on the family house which is cost a lot more than my flat.
Since my primary resident has always been my boyfriend!!!8217;s flat, I wonder:
1) Can my "buy to let" flat becomes my additional resident where I have to pay the additional property tax?
2) What stamp duty will we need to pay for the future family house?

Thank You in advance!

1) No. The new property you will buy will be the additional residential property since it is in addition to the property you already own.

2) You will pay the higher rate of SDLT assuming the rental property is worth more than £40k.. There are plenty of SDLT calculators available online, such as this one. https://www.stampdutycalculator.org.uk/

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

llyl

hazyjo wrote: »

Did your lender know you weren't going to live in it? Did you get a BTL mortgage (very unusual with your first property), or consent to let? (Or neither?!)


Where are you registered for council tax/driving licence/electoral register?


Might make a difference as to your options.

@ hazyjo - Thanks for your comments.
Yes - I got a BTL mortgage and it was made very clear when I bought the house that I am going to let it with my solicitor. Hence my mortgage interest rate is higher than lots of first time buyer's.
On top on that, all my council tax, driving licence, electoral register, bank and other bills are all registered to my boyfriend's flat since I have been living there for more than 3 years.

Someone told me that I can put my BTL property as my additional property and the family house will be my main resident property. And I will be taxed on my BTL flat. So, just wondering if that is doable.

Pixie5740

llyl wrote: »

Someone told me that I can put my BTL property as my additional property and the family house will be my main resident property. And I will be taxed on my BTL flat. So, just wondering if that is doable.

Someone is incorrect. You cannot elect which property you want to count as the additional property. See the SDLT manual I linked to above.

00ec25

llyl wrote: »

Someone told me that I can put my BTL property as my additional property and the family house will be my main resident property. And I will be taxed on my BTL flat. So, just wondering if that is doable.

"someone" should be told to leave tax advice to those who know tax as that person has no clue.

in order to avoid the higher rate SDLT (which is what you will pay because you can't avoid it on your plan) you would have to have a legal interest in BF's property, ie you need to be an owner of it and thus a co seller of it so that then, and only then, would you be replacing your main residence for the purposes of SDLT

andrewjb3

...or marry him before you sell + buy. Then you (as a couple) are replacing your main home, so no extra tax applies.

SDLT_Geek

I agree with the points that it would work if either you had an interest in your boyfriend!!!8217;s flat or you were married to him when he sells it.

On either basis it would be important that you have lived in it as your only or main residence.

llyl

Thanks guys for your advice.
If let's say, we are not ready to get married yet ... and I have to pay the additional property tax... Do I need to pay the 3% of the total amount of the family house or just on my equity part (let's say only 25%) of cost of the family house?

I have also seen some comments on MSE forum suggesting another option:
If I decide to not sell my BLT yet, but sell it within 3 years of after co-buying the family house
that I can potentially get the additional property tax back. Is it correct?

Lysimache

3% on the whole amount of the family even if only one of you is the one who has two properties if there is a joint ownership.

scottishblondie

llyl wrote: »

Thanks guys for your advice.
If let's say, we are not ready to get married yet ... and I have to pay the additional property tax... Do I need to pay the 3% of the total amount of the family house or just on my equity part (let's say only 25%) of cost of the family house?

I have also seen some comments on MSE forum suggesting another option:
If I decide to not sell my BLT yet, but sell it within 3 years of after co-buying the family house that I can potentially get the additional property tax back. Is it correct?

You would pay the surcharge on the whole purchase price. It cannot be claimed back since the property has always been a BTL - the 3 year rule only applies if you are selling your previous main residence.