Stamp Duty For Second Property But Not Selling

psvr87

Hi,

I can't work out whether my case is straight forward or not.

At present i live with family.

But i own a small flat that i let out. Purchased this 18 month ago for about 80k. Paid no stamp duty as it was below the threshold.

I intend to buy second flat for around 180k and move into it myself.

I am not selling the first let property and of course i do not own the family home.

So i will own two properties, but selling none.

Most stamp duty calculators either assume you are first time buyer or selling one property to move to another whether or not you have multiple properties.

When i use the HMRC calculator after responding to the question 'Will the purchase of the property result in owning two or more properties?' with a yes i get the following question and explanation.

Q - Is the property being purchased replacing your main residence?
E - If your previous main residence has not yet been sold choose "No". A refund may be available if the previous main residence is sold within 3 years.

If i answer YES the stamp is around £1k
If i answer NO the stamp is over £6k

My assumption was that the stamp would be £6k before i did the calculator on the basis of having a second property. Which is fine, i pay what i have to.

But the question says, is it replacing my main residence, which it is but i don't own my main residence.

If the correct answer is no it is not replacing it because i dont own the residence, that is fine, just need clarification.

Honestly just confused. I emailed HMRC and never got a response.

Thanks in advance for any help.

davidmcn

"Replacing your main residence" means you're selling the property you live in and are buying a new one to live in, not merely that you're moving house. So you pay the supplement in this case.

SDLT_Geek

Yes, the higher rates are due. You could try reading this to see if it is any clearer: https://www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/

foxy-stoat

If you sold your flat within 3 years you could get a refund.

davidmcn

foxy-stoat wrote: »

If you sold your flat within 3 years you could get a refund.

Not if it hasn't been their main residence, surely?

foxy-stoat

davidmcn wrote: »

Not if it hasn't been their main residence, surely?

Only assumed that at some point it was his main residence as I doubt that a first time buyer could of secured a BTL mortgage....unless they paid cash for it I suppose.

AnotherJoe

psvr87 wrote: »

When i use the HMRC calculator after responding to the question 'Will the purchase of the property result in owning two or more properties?' with a yes i get the following question and explanation.

Q - Is the property being purchased replacing your main residence?
E - If your previous main residence has not yet been sold choose "No". A refund may be available if the previous main residence is sold within 3 years.

If i answer YES the stamp is around £1k
If i answer NO the stamp is over £6k

My assumption was that the stamp would be £6k before i did the calculator on the basis of having a second property. Which is fine, i pay what i have to.

But the question says, is it replacing my main residence, which it is but i don't own my main residence.

I can see why the confusion, they could do with working on that wording, it should probably say "is it replacing a main residence you own" or something like that.

So, yes you are due the extra, and i dont know how much profit your BTL is bringing in but if its say £200 profit per month, that will take more than two years just to break even.

You might do better to sell it.The equity will reduce the mortgage payments on your new property (which is tax free additional "profit" ) and may also put you into a better LTV band with a better interest rate (again, more tax free additional "profit" )

psvr87

foxy-stoat wrote: »

Only assumed that at some point it was his main residence as I doubt that a first time buyer could of secured a BTL mortgage....unless they paid cash for it I suppose.

Never been a main residence for me. I had to get another family member on the mortgage to get the BTL.

psvr87

SDLT_Geek wrote: »

Yes, the higher rates are due. You could try reading this to see if it is any clearer: link

Thanks. This seems to clarify what others have said.

If the home you are buying replaces your main residence, you will not be liable for the 3% surcharge, even if you own an additional property/properties (such as a second home or a flat you rent out) at the same time. This example is from the Government's consultation document:

"A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."

But replacing your main residence means that a previous one will need to be disposed of (eg, SOLD or GIFTED). If you are moving out of rented accommodation or, say, your parents' home, this will NOT count as disposing of your main residence as you are not an owner or part-owner of that property.

kingstreet

foxy-stoat wrote: »

I doubt that a first time buyer could of secured a BTL mortgage.

It's not as difficult as it was...

foxy-stoat

kingstreet wrote: »

It's not as difficult as it was...

With no residential mortgage in place already? Rules may of been relaxed since I was looking a few years ago.