Question on 3% higher stamp duty: if you sell and rent, how long to buy again?

SouthLondonUser

I have a question on when you pay the 3% additional stamp duty.
Let’s say you are resident in England and you

• sell your main home
• move into a rented accommodation
• but keep an interest in another property (eg you own a share of another property) in which you do not live. You acquired this interest before buying your main home which you have now sold.

How long do you have to buy another property before the 3% additional stamp duty kicks in?

If I look up the current guidance on the gov.uk website (last updated 30-Jan-2019) it doesn’t mention any such period. It simply says

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property
You must pay the higher SDLT rates when you buy a residential property (or a part of one) for £40,000 or more, if all the following apply:

1. it will not be the only residential property worth £40,000 or more that you own (or part own) anywhere in the world
2. you have not sold or given away your previous main home
3. no one else has a lease on it which has more than 21 years left to run

Point 2 has no time limit. I would interpret it as meaning that it doesn’t matter whether you sold your main home 2, 3 , or 5 or 7 years ago – as long as you sold it at some point in time, you don’t pay the additional 3%. Is this correct?

However, the HMRC website has this page: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09805
according to which you have 3 years. So is this (3 years) the most up-to-date rule, and the 2nd point on the other gov.uk page is simply imprecise/incomplete?

Press articles are all over the place: some say 18 months, some say 36, most don't say anything, but of course I'd rather rely on official sources.

Thanks!

00ec25

SouthLondonUser wrote: »

sell your main home

• move into a rented accommodation
• but keep an interest in another property (eg you own a share of another property) in which you do not live. You acquired this interest before buying your main home which you have now sold.

the .Gov.uk website is dumbed down in the hope that Jeremy Corbyn supporters can read the short words and may understand some of them

the answer you seek is in the grown ups place: HMRC manual

you have ALREADY sold your main residence. Therefore there is a 3 Year period in which you must purchase the next property you intend to use as your main home provided.


The fact you own and continue to own a second property is irrelevant in the context of replacing your main residence, although what do you mean by "acquired this interest"? Are we talking about (a share of) an inherited property or a place you purchased?
At the point you purchased the (now sold) main residence you already owned a property, therefore presumably paid the higher rate on the purchase of the main residence since you were going from 1 to 2 properties and were not replacing a main property by selling it, instead you were increasing the number of properties you own by +1

as you are buying after selling your previous main home, and are currently in rental, see the BEFORE section
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

this is allowed because you are currently living in a rental residence over which I will assume you do not have a lease of more than 7 years
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09780

such rentals between living in owned main residences are specifically ignored. See the paragraph Renting while replacing a purchaser’s only or main residence in the first link above

SDLT_Geek

18 months is the period mentioned in the 2015 consultation and was adopted for the Scottish LBTT. 36 months is the period for SDLT. It is explained at SDLTM09800.

SouthLondonUser

00ec25 wrote: »

The fact you own and continue to own a second property is irrelevant in the context of replacing your main residence, although what do you mean by "acquired this interest"? Are we talking about (a share of) an inherited property or a place you purchased?

I understand it doesn't make a difference whether the other property was purchased, inherited or gifted, whether it is in England or anywhere else in the world, nor whether I own all of it or only a part, as long as my part is worth more than £40k and it is residential only. Is this correct?

00ec25 wrote: »

At the point you purchased the (now sold) main residence you already owned a property, therefore presumably paid the higher rate on the purchase of the main residence since you were going from 1 to 2 properties and were not replacing a main property by selling it, instead you were increasing the number of properties you own by +1

I bought the (now sold) main property before 2016, so I didn't pay the higher stamp duty because it hadn't been introduced at the time.

Thank you for the detailed links to HMRC's website - very useful

00ec25

SouthLondonUser wrote: »

I understand it doesn't make a difference whether the other property was purchased, inherited or gifted, whether it is in England or anywhere else in the world, nor whether I own all of it or only a part, as long as my part is worth more than £40k and it is residential only. Is this correct?

In the context of inheritance only, no that is imprecise: there is a 3 year time period during which the inherited property is not counted for number of properties you own
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795