Claiming stamp duty refund - anyone done it?

ambc

Hi all - quick question about stamp duty, if anyone can advise.

My wife and I bought our house in October 2017, and at the time she owned a flat that she couldn’t realistically sell because it had dipped into negative equity.

To cut a long story short, we’ve had problem after problem with this flat. An ongoing leak from the upstairs property and a screw up from our insurance company meant that it was uninhabitable for nearly 18 months, and it ultimately meant that we had the kitchen and bathroom entirely stripped back to the brick and replaced. During this time, someone broke in and stole the boiler. Yes, the boiler. And this is just the tip of the iceberg.

Anyway, we’ve been letting it for a few years now - all through a letting agency, we have consent to let, we make sure repairs are done promptly and to a good standard, we meet all legislation, and we’ve tried to make sure the rent is affordable.

We really don’t want to be landlords, but given that we don’t have a choice in the matter, we also don’t want to be the kind of landlord who screws tenants over. I've had good and bad landlords in the past, and I hope we're being a good one.

Another big problem is that there’s always been a fairly high rate of tenant turnover (it’s not in a great area), and today we’ve had a letter (via the agency) from our current tenant who is having serious cashflow troubles and wants to get out of a 12 month tenancy agreement, around 6 months early.

We’re not about to make things worse for him, so we’ll just let him go. But then we have the issue and cost of redecorating the place, finding another tenant, and potentially having another void where we’re paying mortgage and council tax.

Right, back to my original question. We’re now talking about selling this property, because it’s starting to getting in the way of our lives, and it’s affecting the financial decisions we’re making about other things.

However, it’s still in negative equity by potentially up to £10k.

When we bought our house back in October 2017, we had to pay an extra £6k or so in higher rate stamp duty due to my my wife owning this other property. I’m also aware that we can claim that additional stamp duty back within 3 years if we sell this other property during that time.

Thing is, we’d be relying on this stamp duty refund to pay most of the shortfall on the mortgage, once this property sells.

So my question to anyone who’s done this is: is this stamp duty refund guaranteed when you claim it? Do you need to jump through hoops to claim it? Or is there a chance that we wouldn’t get the refund after we claim it?

Has anyone here claimed this refund before? How did it all work out? Was it a smooth process? It just seems like this is a bit of a gamble - selling a property and hoping to be able to claim a SDLT refund to pay the shortfall that results from selling it. It’s a bit risky/worrying.

That make sense?


Thanks!

babyblade41

The government website tells you all you need to know and it's not a case of if someone sits and decides it's whether you fulfil all the criteria the allows the refund.

My solicitor has done it for me on my behalf but it never seems to be a problem and paid in full

https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns#refund

davidmcn

Search the forum, various other people have asked similar questions. In short the answer is that yes, it's guaranteed, but how long HMRC will take to process it isn't.

Thebestmumalive

I did it on behalf of my M-I-L. To avoid too much disruption in her life, we moved her from her home of 50 years to a retirement apartment before selling the house so had to pay the extra stamp duty. Once the house was sold, I filled in the paperwork and the amount was refunded to her in about 4 weeks.

ambc

Ok - great. That's reassuring.

Just another question about the actual amount of the refund that I'm not 100% clear on...

If the SDLT without taking the other property into account would have been £1,740.
And the SDLT we actually paid was £8,100

Would the refund then be £8100 - £1740 = £6360?

Or is there another way of calculating it?

Thanks.

davidmcn

Yes, it's just the supplement that you get back.

AnotherJoe

ambc wrote: »

Ok - great. That's reassuring.

Just another question about the actual amount of the refund that I'm not 100% clear on...

If the SDLT without taking the other property into account would have been £1,740.
And the SDLT we actually paid was £8,100

Would the refund then be £8100 - £1740 = £6360?

Or is there another way of calculating it?

Thanks.

Yes its 3% of the purchase price. Did it cost £212k?

ambc

AnotherJoe wrote: »

Yes its 3% of the purchase price. Did it cost £212k?

Yep, spot on.

AdrianC

ambc wrote: »

...she owned a flat that she couldn’t realistically sell because it had dipped into negative equity.

She certainly could have "realistically" sold it, but it would have dipped into your funds you'd allocated to the other house purchase.

Anyway, we’ve been letting it for a few years now

But it's only 14 months since you bought the other house. And it was empty for 18 months before that?

Has this flat actually been her primary residence within the last three years?

When we bought our house back in October 2017, we had to pay an extra £6k or so in higher rate stamp duty due to my my wife owning this other property. I’m also aware that we can claim that additional stamp duty back within 3 years if we sell this other property during that time.

Providing the sale completes within three years of the purchase date - so October next year at the latest - yes.

And only if the flat was her primary residence within the three years prior to the purchase of the other house.

Has anyone here claimed this refund before? How did it all work out? Was it a smooth process? It just seems like this is a bit of a gamble - selling a property and hoping to be able to claim a SDLT refund to pay the shortfall that results from selling it.

IF you meet the refund criteria, then getting the +3% refunded is guaranteed, yes.

ambc

AdrianC wrote: »

And only if the flat was her primary residence within the three years prior to the purchase of the other house.

Ah, ok. B*gger! So what's the test for that?

She bought this property in 2008 ish.
Lived in it until around 2012 ish, at which point the water damage rendered it uninhabitable for almost 18 months until insurance eventually sorted it out. At that time, we began renting somewhere else together, and we've had tenants in (and out!) since some point in 2013.

I'm now assuming from your info that we/she won't be able to class this as a 'primary residence', and therefore can't claim a refund? Is that correct?

If so, back to square one...

ambc

Just adding to this...

From here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812

The test for the old dwelling is a question of objective fact, was the dwelling at some point in a period the only or main residence of the individual who disposed of it?

To answer that, the dwelling WAS at some point in a period the only or main residence of the individual who disposed of it.

But what's the 'period' referred to in the test? I can't find reference to that anywhere.