Stamp Duty - 2 properties

weanie

My daughter has owned a flat for over ten years - it has been rented out for most of this time. Additionally she bought a home to live in in 2015.
She is now newly married and she and her husband wish to sell the home and buy a slightly bigger one together.
She wishes to continue to hold her flat as an investment property.
Does she pay the usual amount of stamp duty when she buys her new home or will she have to pay a higher rate because she additionally owns her investment property?
I had thought that as her home is her main residence, the investment property did not effect this.
Am I wrong?
Many thanks in advance for any advice

00ec25

where have they lived since getting married?

if they have lived in the 2015 home then no "they" (see *) will NOT pay the higher rate because she intends to sell 2015 home and "replace" it with the new home. The fact she owns a let property is ignored in that exact context

Note *
his circumstances must also be taken into account. As long as they have lived together in the martial home, it does matter if he co-owns the 2015 home or not, they are a couple will be deemed to be replacing their (most recent) "home"

if on the other hand they do not yet live together and he owns his own place, which (crucially) he does not sell, he will be deemed to be buying an additional property and therefore they as a couple would have to pay the higher rate

the mistake everyone makes is not understanding is not a tax on a "second" home, it is a tax on the acquisition of an additional property in certain circumstances. Owning 2, selling the one you live in,and buying a new one to live in whilst keeping 1 other is exempt even though you have purchased a "second" property. It is not "additional" in that context.

SDLT_Geek

I would expect the “replacement exception” to apply so that the extra 3% SDLT would not apply due to you retaining a let property.

weanie

Thank you both so much - they have lived together in the small home she bought in 2015 and she has paid the tax on the investment flat declaring the small home as her/their main residence and paying council tax accordingly.
It is simply the size and location of the small house no longer suits their circumstances. They wish to sell this main residence and buy a bigger one together.
That is great. So they can sell this home and the new home they buy will not attract the punitive stamp duty rates?
That would be such a relief
Thanks again

G_M

Assuming her husband does not own a property (that could change things a lot).


If she sells the property she and he currently live in as their main residence, and buy a replacement main residence, there will be no additional SDLT to pay.


If she does not sell the property she and he currently live in as their main residence,then she'll pay the additional 3% SDLT(although if sh were to later sell it, within 3 years, she cold re-claim the 3% SDLT).

weanie

Thank you - her husband has never owned a property. Such a relief not to face the increased stamp duty costs - thanks you

weanie

Sorry to resurface with this same question but my daughter is very nervous about house buying and worried about the Stamp Duty rules still.
As I said before, she wants to replace her very small main residence with a new house.
Initially she was concerned because she also owns a Buy to let property that was bought over ten years ago. Forum members have given helpful advice regarding this - many thanks again.
However, she also has a 25% interest in a house I own and inherited over ten years ago and I use the rental income to boost my pension income. She gains no rent from this but is noted as having a 25% share with the Land Registry.
So - she owns a Buy to Let flat, a 25% non beneficial share in another rental property [both for over a decade] and in 2015, she took a mortgage to buy her main residence.
This house is to be sold and she proposes buying a bigger home together with her husband [who has never owned property].
She is now concerned that the 25% share might create a high SD charge.
Please could you reassure her?
Many thanks

Slithery

Before the transaction - 1 main residence and 2 other properties.
After the transaction - 1 replaced main residence and 2 other properties.

SDLT will be at the standard rate, not the higher rate for additional properties.

ognum

If she keeps her current residence and only sells it after she has a new one then she will pay the extra stamp duty and claim it back from HMRC when her current main residence is sold.

00ec25

so in the last 20 days you have done nothing to educate yourself on the principles we outlined for you on 5th April, and now you come back with the same question covering the same principle?

do your own reading and tell her the solicitor she will be paying will decide for her if she is that nervous

everything is there for the reading:
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

weanie

Thank you for all the replies - this is as I understood the situation but I am very, very grateful for the information and the confirmation.
Thank you all again for all the time you have taken to reply