Stamp duty recovery on second homes

Tonyjust

As I understand it the higher rate of stamp duty can be reclaimed if the main residence is sold within 3 years of buying the second home. My situation is a bit different. We have bought a second home and we intend to sell our main residence and buy a new main residence however this will mean also selling our second home to do this as the second home was only bought as a holiday retreat and is not large enough to become on new main residence. If we were just selling our main residence and moving into our existing second home it would be simple however the sequence is likely to be, place both main and second homes on the market and sell both and buy the new one however the sequence of selling and buying is likely to be sell the second home and buy the new main residence with bridging finance and then sell the main residence. This allows us to move into the new main residence with all our possessions from the existing second home and then transfer some of our possessions from the old main residence to declutter and make it easier to redecorate and sell it. We will end up with only one home at the end of the process and it should be within the 3 years from first buying our second home. As we have already paid the enhanced stamp duty when buying the second home is this enhanced rate still applied to the new main residence? If we sell they second home when we move into the new main residence can we reclaim the enhanced rate that we paid originally? Is the sequence that we sell and buy important when paying and/or reclaiming the enhanced stamp duty.

00ec25

please use paragraphs, not a wall of text

house A - main home
House B - second home
House C - to be purchased as main home, and on which you will be charged the higher rate since it is an additional property as either A or B (or both) will still be owned on the day you buy C

the risk/fact B sells before A is irrelevant

you will be replacing A within 3 years of buying C, so can then reclaim the higher rate paid on the purchase of C
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

AdrianC

Tonyjust wrote: »

As I understand it the higher rate of stamp duty can be reclaimed if the main residence is sold within 3 years of buying the second home. My situation is a bit different. We have bought a second home and we intend to sell our main residence and buy a new main residence however this will mean also selling our second home to do this as the second home was only bought as a holiday retreat and is not large enough to become on new main residence. If we were just selling our main residence and moving into our existing second home it would be simple however the sequence is likely to be, place both main and second homes on the market and sell both and buy the new one however the sequence of selling and buying is likely to be sell the second home and buy the new main residence with bridging finance and then sell the main residence. This allows us to move into the new main residence with all our possessions from the existing second home and then transfer some of our possessions from the old main residence to declutter and make it easier to redecorate and sell it. We will end up with only one home at the end of the process and it should be within the 3 years from first buying our second home. As we have already paid the enhanced stamp duty when buying the second home is this enhanced rate still applied to the new main residence? If we sell they second home when we move into the new main residence can we reclaim the enhanced rate that we paid originally? Is the sequence that we sell and buy important when paying and/or reclaiming the enhanced stamp duty.

You own A, you live in it.
You bought B as a holiday place, you paid +3%.
You sell A and buy C to live in, you do not pay +3% - you are replacing your main residence.


B is totally irrelevant, because C is replacing A as your main residence.


B was never your main residence, so the +3% is not reclaimable within 3yrs.

AnotherJoe

Tonyjust wrote: »

As we have already paid the enhanced stamp duty when buying the second home is this enhanced rate still applied to the new main residence?

It will be you haven't sold your main residence (house 1) at the same time or before. Because you'd be going from 2 houses to 3 even if temporarily.

Tonyjust wrote: »

If we sell the second home when we move into the new main residence can we reclaim the enhanced rate that we paid originally?

No because it was never your main residence.

Tonyjust wrote: »

Is the sequence that we sell and buy important when paying and/or reclaiming the enhanced stamp duty.

Not in this case, but you can reclaim the extra, if you paid it when buying house 3, once you sell house 1 as long as within 3 years.

The issue in your case is that house 2 was never your residence.
If house 1 is your main residence and remains so after you buy house 2 (holiday home) and then you sell house 2, you cannot reclaim the tax. You can only reclaim if you sell your main residence and 2 becomes your main house. There are rules and procedures around what it takes to claim house 2 as your main residence by the way, in case you were thinking of moving into house 2 for a few weeks and claiming it as your main residence.