Main Residence vs Second home?

dave48

I currently live in rented accomodation provided by my employer at a very reasonable rate.


I am considering purchasing my first property in the area I grew up. It would be the only property I own and I would not rent it out. It is around two hours away from where I work. Doing some calculations, it looks like I would spend approximately 50% of my time at the new house and 50% of the time at the flat I would continue to rent.


Would the new property count as a second home with reference to stamp duty and capital gains tax?

It seems to be a slightly unusual situation and I haven't been able to find a clear answer to this myself. Any guidance is very much appreciated.

00ec25

if you are required by your employer to live in accommodation provided by them (eg pub landlord, school caretaker) then that is not classed as your main residence for CGT purposes, so you could easily buy a place of your own and claim that as your main residence irrespective of how you split your time between the rental and the owned.

read the section on job related accommodation at around point 4.7...
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2018

you may also find this useful:
https://www.gov.uk/government/publications/living-accommodation-hs202-self-assessment-helpsheet

on the other hand, if you have chosen, but are not required by your contract of employment, to live in accommodation owned by the employer, then, and only then, will your living arrangements be relevant. Even then, it may come down to what sort of tenancy you have on the rental, since the rule about nominating a main home is based not on ownership, but on "the first time you have a combination of residences".
Note it is "residence", not ownership which is tested. You can nominate an unoccupied owned property even if you physically live full time in a rental, provided that you make the nomination within the time limit given for "first combination of properties"

SDLT_Geek

00ec25 has addressed the capital gains tax aspects. My turn now on SDLT. As the property will be the only one you own there should (subject to the points below) be no question of the higher rates of SDLT applying. If a buyer has no other property interests then it does not matter for those purposes whether the property is intended to be lived in as the buyer!!!8217;s only or main residence.

But could first time buyers!!!8217; relief be available? You are not paying more than £500,000? You will be the sole buyer? That relief does depend on you intending to live in the purchased property as your only or main residence. This is a factual test for SDLT with no system of elections.

Going back to the higher rates of SDLT, the following factors could make a difference:

Having a spouse or civil partner who owns a property.

Trust interests held for you.

Property interest of minor children.

dave48

That is very useful 00ec25, thank you.


I believe I would qualify under the first category.

dave48

SDLT_Geek wrote: »

00ec25 has addressed the capital gains tax aspects. My turn now on SDLT. As the property will be the only one you own there should (subject to the points below) be no question of the higher rates of SDLT applying. If a buyer has no other property interests then it does not matter for those purposes whether the property is intended to be lived in as the buyer!!!8217;s only or main residence.

But could first time buyers!!!8217; relief be available? You are not paying more than £500,000? You will be the sole buyer? That relief does depend on you intending to live in the purchased property as your only or main residence. This is a factual test for SDLT with system of elections.

Going back to the higher rates of SDLT, the following factors could make a difference:

Having a spouse or civil partner who owns a property.

Trust interests held for you.

Property interest of minor children.

Thank you for your reply.



Purchase price of around £250,000, either bought by myself or jointly with my girlfriend. I don't believe any of the other factors you mention would apply in this case. So my only question would be regarding:


'That relief does depend on you intending to live in the purchased property as your only or main residence. This is a factual test for SDLT with system of elections.'


Do you believe I would be able to elect the house as my 'main residence' and recieve the first time buyer relief?

SDLT_Geek

dave48 wrote: »

'That relief does depend on you intending to live in the purchased property as your only or main residence. This is a factual test for SDLT with system of elections.

I apologise, for SDLT there is NO system of elections, it is purely a question of fact. I have corrected my earlier post now.


HMRC list some factors that are relevant to which property is considered your main residence here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812 It will help you to look at those to see how to apply the test in your case.

dave48

Thanks, looking at the points to consider, it looks like I might qualify for the full FTB relief in terms of it being my main residence. But if I had to pay stamp duty at the normal rate, being £2500 on a £250000 property, that is something I could live with, if it came to it.