Buy to let and stamp duty refund

tegwin

I am struggling to understand the wording on the Gov website with regards to refund on higher level stamp duty.

• I own a house which has been my main residence.
• I want to buy a house with my partner which will become my new main residence. I will have to pay higher rate stamp duty as I still own the other property.
• I don't want to immediately sell the first house and was considering renting it out whilst I sort myself out in the new home.

If I DO NOT let the first house out and sell it within 3 years I understand I can claim it as a change of main residence and get a refund.
If I DO let the house out but sell it within 3 years am I still able to get a refund?  

SDLT_Geek

Yes.  You can still reclaim it.

AdrianC

You currently own 1 house, A, your primary residence.
You are buying 1 house, B.
If you do not sell A, you will own 2 houses, so will pay +3% on B.
If you sell A within 3yrs, you can reclaim the +3% so long as B is your primary residence at the time of the reclaim.

Doesn't matter if A or B are let during the overlap period.

Right, that's the easy answer. Now let's look at the logic going on behind the question.

Why do you want to rent out A for such a short period? It can't be for financial reasons, because if the +3% ends up not being reclaimable, that will outweigh any net rental income on it... Why not just chain the transaction, or if you want to break the chain, at least try and sell A immediately?

tegwin

Thanks for the replies.

I have found a property I want to buy but fear I might lose it if I wait for a sale on my original home. I had not planned on finding something I wanted so soon!

the ideal would be to sell it first but that may not work so I’m looking for another option whilst I tidy it up and get it on the market. 

ThePants999

If you can afford to buy without selling first, go for it, but why does that mean letting it? It'll be a lot harder to sell with tenants in it...

AnotherJoe

What you'd gain by "tidying it up" you'd more than lose by getting tenants in after tidying. 
Insanity. 

Harrycat123

Like a few others here we have lost our previous main residence property sale (that we were renting out) and as such it looks like we will not be able to complete a sale within the 3 year period in order to claim the 3% stamp duty premium we paid on our present main residence. Are these any Government plans etc to extend this 3 year claim period because of the pandemic and the housing market all but closing?

davidmcn

Harrycat123 said:

Are these any Government plans etc to extend this 3 year claim period because of the pandemic and the housing market all but closing?

I doubt it. Government needs the cash to spend on everything else.

SDLT_Geek

I heard from the HMRC Stamp Taxes team today that this issue is being considered at a high level.  They were tight lipped though as to what might happen.

greatcrested

You are (currently) right that you can reclaim the additional SDLT if you sell within 3 years irrespective of whether you let or not.

But given the circumstances, letting is not advisabe for other reasons. Far too many leglislative hoops to jump through, and potential practical issues, to justify a short term let. But if you must, read the stickies:

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

Comms69

tegwin said:

Thanks for the replies.

I have found a property I want to buy but fear I might lose it if I wait for a sale on my original home. I had not planned on finding something I wanted so soon!

the ideal would be to sell it first but that may not work so I’m looking for another option whilst I tidy it up and get it on the market. 

You may well find that the tenants dont want you 'tidying up' and therefore tell you that you're not welcome on the property.