Stamp Duty on Temporary Home

siriusz

Hi,


I am having my house renovated and I will not be able to stay in it while the work, which may take 6 month or more, is done. I have bought a cheap, temporary house to stay in and I have been charged stamp duty on the temporary house as though it was a second home. I expect the higher rate of stamp duty but I will only be living in one house at a time if you see what I mean so as I plan to sell the temporary house and move back to my renovated house do you think that I can successfully reclaim the additional stamp duty that I paid?

cattie

No, you've bought 2 houses & it doesn't matter how long or if you even intend to live in either of them, the stamp duty will need to be paid. If you'd wanted to avoid paying stamp duty whilst living elsewhere while refurbishment works went on, then the wisest choice would have been to find a rental property for 6 months.

siriusz

In the past though, I have bought a house, paid the higher rate of stamp duty (for a second home) and though it took a while to sell my previous one, I was still able to reclaim the stamp duty. Is the principle not the same? For example, if I bought a second home to do up and then sold my first home, having moved into the new one, would I not be able to claim the second-home stamp duty back if it was all completed within the allowable time?

I did not want to rent anything as the building work may take a while to start and may take longer to complete than estimated. I'm not renting out the second house to anyone while I'm not in it so only one residence at a time will be "lived in".

gingercordial

siriusz wrote: »

In the past though, I have bought a house, paid the higher rate of stamp duty (for a second home) and though it took a while to sell my previous one, I was still able to reclaim the stamp duty. Is the principle not the same? For example, if I bought a second home to do up and then sold my first home, having moved into the new one, would I not be able to claim the second-home stamp duty back if it was all completed within the allowable time?

I did not want to rent anything as the building work may take a while to start and may take longer to complete than estimated. I'm not renting out the second house to anyone while I'm not in it so only one residence at a time will be "lived in".

No it is not the same.

In the past you have owned house A, bought house B, then sold house A. For this you can get a refund.

In your situation now you own house A, bought house B, and want to sell house B. The stamp duty law is not worded to give you a refund in these circumstances.

Whether or not you think it should be the same principle, tax law is very precise and if you don't fit the exact wording you won't get the benefit. Unfortunately you do not meet the requirements here and so there is no refund available. It is too late now but it is always worth checking with a solicitor or tax adviser that what you think should be the case is actually going to be the case for your circumstances.

Slithery

siriusz wrote: »

In the past though, I have bought a house, paid the higher rate of stamp duty (for a second home) and though it took a while to sell my previous one, I was still able to reclaim the stamp duty.

Correct.

Is the principle not the same?

No.

For example, if I bought a second home to do up and then sold my first home, having moved into the new one, would I not be able to claim the second-home stamp duty back if it was all completed within the allowable time?

Yes.

In your current situation you aren't selling your previous main residence so the refund doesn't apply.

siriusz

Thanks everyone - I thought as much

I still think the principle is the same, though I accept that the way the tax legislation is worded, I will not be entitled to a refund. However, I think that it is both unfair and short-sighted of HMRC to not grant a refund on the higher-rate, second-home stamp duty:


1. Unfair because I won't reap any benefits from owning the second home temporarily other than convenience i.e. I will not be renting it out (Buy to Let) or using it at the same time as my other property.


2. Short-sighted because If I would have rented a property, HMRC would almost certainly have received less revenue overall.