Stamp duty refund after renting out?

pamplemoos

HMRC says you can claim back the second home stamp duty within 3 years of selling your main home if "At the time of the purchase of the new property, the purchaser intended to live in the new property as the purchaser’s only or main residence"

What happens if I intend to make the new flat my only/main residence, but only after my old flat has sold? Can I rent out the new flat while I wait for the old one to sell?

I'm worried that renting out the new flat for a while might make it look like we're not intending to make it our main/only home. We can't rent out the old flat because it's a shared ownership property, and we can't afford to not rent out one of the flats.

AdrianC

Umm, what happens if you sell the old flat but can't regain possession of the new one for months? Let's say you get a tenant in, on a 12mo AST, then the day after they move in you get an offer that you want to accept.

You can't expect the buyer to wait 12mo (plus potential court and bailiff and refurb) time before completing.

Or is there a reason other than simply not being able to sell the old one yet? If it is just that, reduce the price. It'll be a LOT easier in the long run.

pamplemoos

You haven't answered my question!
In theory it could be a short-term let (not uncommon in London) and we could even stay with family for a short time if the old flat does sell quicker than expected. The buyer wouldn't have to wait - we would be chain free. It would be a hassle but at least we wouldn't miss out on a flat we love.

We've reduced the price already but can't go lower than the valuation because it's shared ownership.

AnotherJoe

Unless you are prepared to break the terms of your mortgage I think the answer will be that you cant do this anyway because either you cannot let it out because you dont have a BTL mortgage, or if you bought it on a BTL mortgage immediately that doesn't look like you intend it to be your main residence and what happens if you sell the day after the tenants move in it could be more than a year before you get them out.

I think if you want to sell below the valuation then you need to follow whatever process it is that lowers that valuation to the agreement of the SO company otherwise you could be stuck selling it indefinitely - what if prices remain below the current valuation for five years?

Slinky

We've done what you intend to do and should be able to claim back the stamp duty. We paid cash for the onward property so didn't have any of the mortgage issues refered to above.

SDLT_Geek

pamplemoos wrote: »

HMRC says you can claim back the second home stamp duty within 3 years of selling your main home if "At the time of the purchase of the new property, the purchaser intended to live in the new property as the purchaser’s only or main residence"

What happens if I intend to make the new flat my only/main residence, but only after my old flat has sold? Can I rent out the new flat while I wait for the old one to sell?

I'm worried that renting out the new flat for a while might make it look like we're not intending to make it our main/only home. We can't rent out the old flat because it's a shared ownership property, and we can't afford to not rent out one of the flats.

According to HMRC in the last paragraph of the guidance in the Manual here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812 you would not be entitled to a refund of the extra 3% SDLT paid on the new property if your intention on buying the new property is to let it out for a while.

00ec25

at section 4ZA, part 2 para 3 point 7a) the law says:
(a)on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser’s only or main residence,
http://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted

I have not seen any guidance that clarifies how to quantify "intent". Perhaps SDLTgeek may know if/when re replies to this thread.

SDLT_Geek

00ec25 wrote: »

at section 4ZA, part 2 para 3 point 7a) the law says:
(a)on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser’s only or main residence,
http://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted

I have not seen any guidance that clarifies how to quantify "intent". Perhaps SDLTgeek may know if/when re replies to this thread.

The only official HMRC guidance on how to establish the intent is in SDLTM09812, which is carried forwards from the earlier guidance in pdf form.