Stamp Duty second property avoidance

skinnydipper

Hi all, 

after a little advice here....,

we're just about to move house and obviously last weeks announcement of the stamp duty holiday came as a great announcement however I'm just sorting out all paperwork now and upon further investigation think I've got my ideas wrong..

this is the situation... due to the current stupid housing price situation the terrace house I purchased 20 years ago has now sold for £499,950, 

I am purchasing an older style house which needs work for £540,000.. We have equity of around 300k with a mortgage of £240,000

I got married last year and my wife(remarried), who is welsh, was left her nan's house in her mothers will 3 years ago and lived in it for a year prior to that.

The house itself is worth £115,000 realistically. and brings in a rental of around £500 per month

Now originally when buying our new property, I was advised to take the mortgage out solely in my name and purchase the house in my name, thus avoiding stamp duty as my wife name would not be on the deeds

So I worked out the SDLT @ 3% ( single property) over £540,000 and with the stamp duty holiday its £2000

however , 

While looking into everything this week, I realised that a married couple count as one unit and therefore I would potentially be liable to SDLT on a second home rate.

So I worked out the SDLT @ 3% ( second property) over £540,000 and with the stamp duty holiday its £18,200....

Is there any way to avoid this? 

If there's not it would probably make sense to sell the property as the rental of £500 a month equates to a mortgage borrowing of £115,000 and we could reduce our borrowing requirement and save on the second property tax rate thereby saving ourselves a further £16,000 in stamp duty.

It would mean we would need the sell the welsh property quickly though which is possible, as my wife's sister would purchase it from us

thoughts and advice welcome please

 

greatcrested

Is there any way to avoid this?

Yes, sell the 1st property before buying the 2nd (or within, I think, 20 days).

AdrianC

skinnydipper said:

this is the situation... due to the current stupid housing price situation the terrace house I purchased 20 years ago has now sold for £499,950, 

I am purchasing an older style house which needs work for £540,000.. We have equity of around 300k with a mortgage of £240,000

I got married last year and my wife(remarried), who is welsh, was left her nan's house in her mothers will 3 years ago and lived in it for a year prior to that.

The house itself is worth £115,000 realistically. and brings in a rental of around £500 per month

Now originally when buying our new property, I was advised to take the mortgage out solely in my name and purchase the house in my name, thus avoiding stamp duty as my wife name would not be on the deeds

So I worked out the SDLT @ 3% ( single property) over £540,000 and with the stamp duty holiday its £2000

however , 

While looking into everything this week, I realised that a married couple count as one unit and therefore I would potentially be liable to SDLT on a second home rate.

So I worked out the SDLT @ 3% ( second property) over £540,000 and with the stamp duty holiday its £18,200....

Is there any way to avoid this? 

Taking all the excess out, the situation seems to be...
You (married couple) are selling your (married couple) previous primary residence (the terrace).
You (married couple) are buying another primary residence.
You (married couple) also own another property.

Right? Because if so, that other property is disregarded, because you're changing your primary residence. No +3%.

skinnydipper

yes we are changing primary residence... so you believe we are not liable for second home tax?

Doozergirl

You got some strange advice.  

You were always replacing your main residence, so the 3% was never a problem.  

Before you married, your wife would have been buying an additional property because she didn't have a main residence but owned another property.  If she was buying with you, unmarried, that would have triggered the 3%.  Perhaps that is where the advice stemmed from.  

skinnydipper

So I am correct in saying that as we are buying a new primary residence @ £540,000 and with the stamp duty holiday in effect.. we pay nothing on first £500,000 and 5% on the second £40000 
therefore £2000 Stamp Duty liability 

greatcrested

Ignore my earlier advice - I missed the fact that you are selling & replacing your main residence.

Adrian's shortened version of your extended post helped.....

Doozergirl

skinnydipper said:

So I am correct in saying that as we are buying a new primary residence @ £540,000 and with the stamp duty holiday in effect.. we pay nothing on first £500,000 and 5% on the second £40000 
therefore £2000 Stamp Duty liability 

Yes, as long as the £499k house sale had completed at the time you complete on the new one.  

So if it's all happening on the same day, it's £2,000k liability.   

skinnydipper

love you doozergirl...or your advice anyway....

skinnydipper

and you too Adrian C..

you've both made me very happy...

thanks for advice

faye6174

I hope it is OK to jump on this? Thought it would be easier than starting a new thread for the same topic. 
We (married if it matters) jointly own a property currently rented out with tenant. We are ourselves currently renting in a different area due to husbands job. 
We will be remortgaging our currently owned house to release equity and then buying another property which will become our main residence. 
Do we pay 3%? We have conflicting advice.