Selling Buy to Let SDLT Question

K.J.N

Hello all,

Sincere thanks for stopping by to read and hopefully advise.

In 2016 I was a FTB and bought my first property. It was purchased using a Buy to Let mortgage. At first, I was going to buy it as a family home, but I had to move due to work and could not afford to buy in the area we were to move to. I went ahead and bought the house anyway, for 100k, as a FTB with a Buy to Let mortgage, and I have been letting it out ever since. We didn't ever live in the property.

Since then we have lived in rented accommodation and I now have savings to purchase a home for us to live in. This will be our permanent home, my main residence. Looking at homes valued around the 200k mark.

My question is this: As the first property I purchased was a Buy to Let, which I never lived in, what rate of Stamp Duty Land Tax will I have to pay on the second purchase? Does it make a difference that I didnt ever live there?

Additionally, in your opinion; would I be better off selling the Buy to Let? The hope was to let that pay for itself for the kids to inherit one day, but if the SDLT is going to eat a lot of the deposit for the family home maybe it isn't worth holding onto?

Thank you in advance

davidmcn

You already own one residential property, you're buying another one so the additional rate of SDLT will apply (no matter what you're using the properties for). If you want to avoid that you'll need to sell the first property no later than the completion date for the purchase.

GDB2222

Good question, but no miracle cures here, I’m afraid.

AnotherJoe

K.J.N wrote: »

My question is this: As the first property I purchased was a Buy to Let, which I never lived in, what rate of Stamp Duty Land Tax will I have to pay on the second purchase? Does it make a difference that I didnt ever live there? Yes you'll have to pay the extra 3%, and no it doesn't make a difference.

Additionally, in your opinion; would I be better off selling the Buy to Let? The hope was to let that pay for itself for the kids to inherit one day, but if the SDLT is going to eat a lot of the deposit for the family home maybe it isn't worth holding onto?

Thank you in advance

Well, it will cost an extra £6,000 plus whatever the extra mortgage costs are as your LTV will be worse plus a bigger mortgage plus possibly not the house you'd prefer as you'd be able to afford bigger / better using the equity in it.
Only you know what those numbers mean to you.

A simple question, if you look at the profit on the BTL*, how long would it take you to recoup the £6k its costing you on the new house?



* taking everything into account - rent vs expenses, rising or falling house price and so on

Rural_Puppy

O/P does not mention where they are in the country. Although likely to be England as SDLT mentioned. Bear in mind the rules on Scotland are different. Rate for additional property is 4% up here where stamp duty is more properly known as LBTT.

silvercar

davidmcn wrote: »

You already own one residential property, you're buying another one so the additional rate of SDLT will apply (no matter what you're using the properties for). If you want to avoid that you'll need to sell the first property no later than the completion date for the purchase.

I thought you could have the extra SDLT refunded if you sold the first property within 18 months of buying the second?

davidmcn

Rural_Puppy wrote: »

O/P does not mention where they are in the country. Bear in mind the rules on Scotland are different. Rate for additional property is 4% up here.

True, but given they said SDLT I'm assuming they're talking about a country where SDLT exists i.e. England or Northern Ireland.

AdrianC

K.J.N wrote: »

My question is this: As the first property I purchased was a Buy to Let, which I never lived in, what rate of Stamp Duty Land Tax will I have to pay on the second purchase?

+3%.

Does it make a difference that I didnt ever live there?

You're getting confused between SDLT and CGT.

Additionally, in your opinion; would I be better off selling the Buy to Let?

I have absolutely no idea, since you haven't given us any details of yield or any of the other business finances. Which, in itself, probably tells us a lot.

The hope was to let that pay for itself for the kids to inherit one day, but if the SDLT is going to eat a lot of the deposit for the family home maybe it isn't worth holding onto?

Is it even a repayment mortgage? Why not just put the same amount as the repayments into an investment where interest is working with, not against, you?

silvercar wrote: »

I thought you could have the extra SDLT refunded if you sold the first property within 18 months of buying the second?

You're thinking of where you're overlapping a previous primary residence with its replacement.

davidmcn

K.J.N wrote: »

Does it make a difference that I didnt ever live there?

AdrianC wrote: »

You're getting confused between SDLT and CGT.

Not necessarily - they could have taken advantage of the relief for replacing a (former) principal residence if they bought first and then sold the first property quickly enough.

[Deleted User]

silvercar wrote: »

I thought you could have the extra SDLT refunded if you sold the first property within 18 months of buying the second?

It's 36 months not 18 months and that's only if you are replacing your main residence. The BTL property has never been a residence of the OP never mind the main residence.

scottishblondie

Lover_of_Lycra wrote: »

It's 36 months not 18 months.

It's only 18 months in Scotland, a difference which can lead to some confusion and both numbers floating around whenever this comes up.