Stamp Duty Question

Woolsy84

I just want to ask a question regarding stamp duty.
I want to rent out my home that I'm currently living in and buy a house to live in for about £625,000, would I still come under the additional property charge which would be £40,000 according to https://www.stampdutycalculator.org.uk/ ?

Lokolo

Yes it would be due.

00ec25

of course you would

you own a main home
you are NOT disposing of the main home , you are letting it

you are buying a new main home but are NOT replacing the old one with the new one, since you owned 1 property and will now own 2 - that is why it is called a tax on the purchase of additional properties where there is no "replacement" of the main home

AnotherJoe

How many years of rental profit would it take you to recoup the £40k even if all the tenants were perfect, with no additional costs, and no voids?

I can't believe this would be a viable proposition.

BarleyGB

Is your current home suitable for renting, location, yeild, rental demand etc.

Alternative option and potentially less costly. Sell current home, buy new home (avoiding Stamp Duty excess calculted on £625k purchase price). Then buy a property to rent out (if its cheaper than the new house youll be buying youll pay less stamp duty)

Woolsy84

I should have given a little more detail, we're just in the process of selling our second home, the current house we live in is worth £350k. Not sure if this changes any of your suggestions?

AnotherJoe

Woolsy84 wrote: »

I should have given a little more detail, we're just in the process of selling our second home, the current house we live in is worth £350k. Not sure if this changes any of your suggestions?

Not if you dont propose to sell the house you live in, which i presume is not your second home you referred to?
Unless the second home was your main residence within the last 3 years in which case maybe there's a loophole about which a specialist might be able to comment.

Woolsy84

AnotherJoe wrote: »

Not if you dont propose to sell the house you live in, which i presume is not your second home you referred to?
Unless the second home was your main residence within the last 3 years in which case maybe there's a loophole about which a specialist might be able to comment.

No I'm not selling our main home. The second home that we are selling we've had 2 years and its not been rented out or lived in.

00ec25

Woolsy84 wrote: »

I should have given a little more detail,

yes you should have done


we now have to start again this time filling ALL the gaps

Woolsy84 wrote: »

No I'm not selling our main home. The second home that we are selling we've had 2 years and its not been rented out or lived in.

so you own 2 properties

the one you live in : Property A
the one you have never lived in as a main residence: Property B ("the second home")

You are NOT selling A, it is to be kept and eventually let
You are selling B
You are buying C, which from the outset will be the new main home

you will pay the higher rate SDLT because you are not "replacing" your main home. A is being let, it is not being sold

in reality C is an "additional" property because it is not replacing A. The fact you sold B and therefore went from 2 to 1 and back to 2 is irrelevant in this context

there are 4 conditions to the test, they are not that difficult to understand - why not read them
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800