Buying second home stamp duty

kakalokia

Hi all,

I was wondering if someone can please help me with a question regarding stamp duty.

I'm planning to rent out my current property, and buy my parent's home (at a discounted price) to move into and have as my main residence.

The mortgage adviser suggested that I should do some research around stamp duty as I may need to pay extra if I'm buying a second property.

I've read around and still don't feel I found a clear answer. Some articles suggest that if the new property I'm buying becomes my main residence, then I don't have to pay extra on the stamp duty if I keep my old property and rent it out. Is this correct? If not, how much stamp duty would I have to pay in total if I'm buying a second property for let's say £140,000?

Thanks

davidmcn

kakalokia wrote: »

Some articles suggest that if the new property I'm buying becomes my main residence, then I don't have to pay extra on the stamp duty if I keep my old property and rent it out.

Can you post us a link to any of these articles?

Keep_pedalling

No it’s not correct, going from 1 to 2 houses means you pay the additional stamp duty.

How deeply have you researched the wisdom or otherwise of becoming a landlord?

00ec25

kakalokia wrote: »

I've read around and still don't feel I found a clear answer.

there is only one source that matters.... HMRC

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

you will pay the higher rate, assuming that is on 140k it will cost you £4,500
https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

explained in total detail here:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

SDLT_Geek

kakalokia wrote: »

I'm planning to rent out my current property, and buy my parent's home (at a discounted price) to move into and have as my main residence

It sounds very likely from what you say that SDLT will be due at the higher rates. You are not "replacing" a main residence unless you have sold / disposed of a previous one.

But there is another issue here. You say you are buying at a discounted price. Depending on how the purchase is structured you might pay SDLT worked out on:
(a) The discounted price
(b) The value.
I suggest you look up about gifted deposits, gifted equity, concessionary purchases and transfers at undervalue.

agrinnall

Surely the answer will be (b) as the OP is buying from a "connected person"?

Teamocil

Don't become a BTL landlord. If you really must, then pay your tax to be so.

kinger101

agrinnall wrote: »

Surely the answer will be (b) as the OP is buying from a "connected person"?

That only applies to purchases made by corporations I believe.

csgohan4

Do you really want to be a LL?

https://forums.moneysavingexpert.com/discussion/5896992/evicting-tenants-via-court-and-bailiffs

agrinnall

kinger101 wrote: »

That only applies to purchases made by corporations I believe.

This article (admittedly from 2 years ago) suggests otherwise.


https://kb.taxcalc.com/2252

SDLT_Geek

SDLT_Geek wrote: »

But there is another issue here. You say you are buying at a discounted price. Depending on how the purchase is structured you might pay SDLT worked out on:
(a) The discounted price
(b) The value.
I suggest you look up about gifted deposits, gifted equity, concessionary purchases and transfers at undervalue.

I am hoping that this is a link to another thread where the issue of buying at a discounted price is discussed. https://forums.moneysavingexpert.com/discussion/5908810/gifted-equity-deposit-sdlt-1-form

A key to saving SDLT is to establish early that the lender is happy for the purchase price to be stated on all the documents as the actual reduced price (so it is a concessionary purchase / purchase at undervalue).

Some lenders insist on treating it as if the parents first gift a sum of money, so that the purchase is then made at the full value.