SDLT: 2nd Home or not 2nd Home? That is the question!

Pop_Tarantula

As a Time-Served Lurker, I know there are an abundance of 'repeat offenders' who don't Search, so I've made sure to trawl first... & cannot find a scenario to match. To save time replying to requests for more info, there follows, unfortunately, quite a lot of detail for such a very short question at the end. Tres desole!

To stem the tide of SDLT related sighs, raised eyebrows & "here we go agains", I'm definitely not looking for an avoidance scheme, etc.. just a little clarity on the results I got from 2 different SDLT calculators.

FYI

We've owned a French property since 2001 & are currently disposing of it. We have never lived there or let it out. It has remained unoccupied & although watertight & secure, due to it's mid-renovation state interior, is quite uninhabitable. It has never been our residence, we've never had a holiday there. We had intended to move there; then retire there; then lost motivation with recent Gov't v EU insecurities (I refuse to type THAT word)

We currently rent a UK property. It's was a mates rates deal for a few years while we fixed up the French house, which due to various circumstances has turned into a more long term arrangement spanning 18 years or so.

We are now looking to purchase our first UK home (£145k) & being completely new to the UK property market & it's various rules & regs, we had naively assumed we were 1st Time Buyers, but no... OK. Got that. Owned UK or Abroad.... So we're not then! Moving on.

* ACTUAL QUESTION *

After I tried the MSE SDLT calculator (£400), I used a property site SDLT calculator for comparison (KnightFrank - £400 or £4750). There are 2 checkboxes on it & I am stuck on the correct answer for Q2.

Q1. Are You a 1st Time Buyer? NO

Q2. Is this a 2nd Home or BTL property? PASS!!


It will be, by definition, our 2nd property purchase (1 in France, then 1 in UK) but is it our 2nd HOME? given the situation described above :question:

I look forward to any sage advice & wisdoms forthcoming, preferably with supporting links &/or case studies... or a simple Y/N answer

ThanQ Inn Advancium
^J

franklee

Yes it is your second home if you buy before selling the other house. If the other house is worth more than 40K you will pay the extra tax.

See here for details:

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

Extract:

"Individuals and companies need to pay the higher rates when they buy an additional residential property in England, Wales or Northern Ireland. The higher rates apply even if your other residential properties are outside any of these countries."

I guess you are thinking is there an exemption for the other property being "uninhabitable"? Not heard of one.

Did you ever own your own home in the UK that you then sold before renting? If so there's this:

https://www.zoopla.co.uk/discover/buying/12-month-countdown-to-escape-second-home-stamp-duty/#KXsHJXpj1b4qEQJF.97

marliepanda

Sorry, but your post acts like this is a particularly unique situation but it really is

You have one house (home/dwelling/property its all the same) and you are buying a second. Of course it is your second home.

Nothing complicated or unique about it...

00ec25

Pop_Tarantula wrote: »

quite a lot of detail indeed, hence the deletion for such a very short question at the end. Tres desole!

Q1. Are You a 1st Time Buyer? NO

Q2. Is this a 2nd Home or BTL property? PASS!!


It will be, by definition, our 2nd property purchase (1 in France, then 1 in UK) but is it our 2nd HOME? given the situation described above :question:

Q1 correct, you are not

Q2 misinterpreted the Q, the rules are about buying property, not homes or BTL. AS ever the journalists at MSE haven't understood things and focus only on headline grabbing sensation

- you own a property
- you own 100% of that property
- you will be buying an ADDITIONAL property

there are 2 REAL questions:
a) is the French property worth more than £40,000 (if yes then you cross the threshold where it is considered for higher rate SDLT applicability)

b) if answer to Qa) is yes, then will the sale of the French property have legally completed BEFORE you legally complete the purchase of the UK property?
Answer: yes or no
if yes you pay std rate SDLT
if no you pay higher rate SDLT BUT (see * for caveat to this further comment) since you have never lived in France you cannot get a refund of the excess SDLT since the French property was never your home so you are not replacing it when it finally does sell

* caveat:
and as mentioned by Franklee, you have until Nov 2018 to claim a previously owned, but now sold, property was once your main home and that since its sale you have been living in rented and therefore if you do so by that date the earlier property would qualify as a replacement and would enable you to claim a refund if you had actually lived in the earlier one whilst owning it

please read the guide, it really is comprehensive:
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

AnotherJoe

Not unique at all, you own a house and are looking to buy another one ! Everything else apart from the fact you did not live in it as your residence, is irrelevant detail.

Sell the French house, then buy here. (Unless its such a dump its worth less than £40k)

Otherwise you are going to pay the extra 3% and worse, not being able to reclaim it because it was never your residence.

SDLT_Geek

The HMRC on line guidance referred to so far is but a very poor summary. What is in the HMRC Manual is much better. Condition D there is still misleading but HMRC are working on that right now. Here is where you will find the Manual index page: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730


You will see there that the £40K test could be a £40K per owner test if you own the French property jointly. French properties are sometimes held in a corporate body. If that is the case here then the property might not count against you anyway.

Pop_Tarantula

My confusion lies at having no experience of the UK property market & the legalise, jargon & assorted terminology therein. Especially 'your main home'... The French property has never been anything more than a residential building we currently own. Home has always been UK rented, by my definition/interpretation. Home implies residence, where residential property does not.

The only time I understand anything perfectly clearly is when I read the info provided for returning ExPats, who may be living in rentals while selling their former home abroad... which doesn't apply in this case.

Clearly, there will be some professional advice sought in due course. I simply wanted to get a handle on what we would be liable for & at what rate.

Thank you for the advice & comments

Pixie5740

The higher rate of SDLT is for the purchase of an additional residential property. That's what the HMRC manual says so forget about terms such as "main home" it's whether you are buying an additional residential property that's important not what you do with that additional residential property.

Pop_Tarantula

Pixie5740 wrote: »

The higher rate of SDLT is for the purchase of an additional residential property. That's what the HMRC manual says so forget about terms such as "main home" it's whether you are buying an additional residential property that's important not what you do with that additional residential property.

After reading 00ec25's reply, I can actually see past the problem phrase & move on, despite the GOV.UK & HMRC websites using it frequently in their documentation & examples.


The take-away for my situation appears to be 'complete before buying, to pay less tax'. That'll do.