Selling main home - buying a house with current tenants extra 3% SDLT?

Disjoint

Another one for the SDLT conundrum +3% -
I moved abroad this year, however my wife is still in the UK and will be a tax resident in the UK this year. We will be selling our main home and want to buy another main home as we intend to come back to the UK in a few years (wife still has a business here and we own a couple of BTL).

My wife has a BTL that she co-owns with her sister, we want to buy her sister out and have that house as our main house for when we come back. Currently tenants are living there and we like them so want to keep them in occupation for the time being. Can I replace my main home with current tenants in occupation? If I can't I'll give notice to tenants but I'd rather not do that as we like them and they've been living there for 5+ years, and as my wife will come to live with me abroad we would have to let it out after Apr-21 anyways when my wife will no longer be a UK resident. We do not intend to buy where we are living as it's temporary and a move due to financial difficulties in the UK due to Covid-19 and I picked up whatever job I could get.

At the moment, I can only think that we will have to give tenants notice before buying her sister out, but always worth checking!

greatcrested

You are buying a property to let out. You will pay the additional SDLT.

If you sell your current main residence, and your wife and sister end the current tenancy, and then sell the property to you and your wife with vacant possession to use as your replacement main residence, you will not pay the additional SDLT.

davidmcn

I can't see SDLT being an issue if you're selling the only property either of you own, and buying one property. It'll just be standard SDLT rates which apply no matter whether you're letting it out or not (as long as your purchase doesn't complete any earlier than the completion of your sale).

The "replacing your main home" concession would only apply if either of you owned some other property, but I assume you would have mentioned that if you did? Although temporarily kicking the tenants out probably wouldn't be sufficient to show an intention for it to be your main residence anyway!

Grumpy_chap

davidmcn said:

if either of you owned some other property, but I assume you would have mentioned that if you did? 

The OP said

Disjoint said:

and we own a couple of BTL).

It rather looks as though the SDLT surcharge will apply.

davidmcn

Grumpy_chap said:

davidmcn said:

if either of you owned some other property, but I assume you would have mentioned that if you did? 

The OP said

Disjoint said:

and we own a couple of BTL).

It rather looks as though the SDLT surcharge will apply.

Missed that! Yes, as I said if they're fully intending to let it out from April anyway this isn't going to qualify.

AdrianC

Disjoint said:

Another one for the SDLT conundrum +3% -
I moved abroad this year, however my wife is still in the UK and will be a tax resident in the UK this year. We will be selling our main home and want to buy another main home as we intend to come back to the UK in a few years

Umm, how will it be your primary personal residence given that you'll be living elsewhere?

Disjoint

AdrianC said:

Disjoint said:

Another one for the SDLT conundrum +3% -
I moved abroad this year, however my wife is still in the UK and will be a tax resident in the UK this year. We will be selling our main home and want to buy another main home as we intend to come back to the UK in a few years

Umm, how will it be your primary personal residence given that you'll be living elsewhere?

My wife can essentially establish main residence there for a couple of months. My daughters are still with her as well in London and she is paying a full blown rate of taxes to HMRC for this year so that shouldn't be too much of an issue. I am the only one abroad at the moment and fly back to London every weekend, but nicer to have the family together.
As others have indicated , there are no miracles and I'll have to give notice it seems however.
Thank you all for your answers!

getmore4less

How much is 1/2 the house worth?

How much rent are you going to lose through voids and why swap a good tenant for the potential of one that is not so good. 

Then you have the risk that your nice tenants take the hump and don't move quickly or find you have got something wrong with your notice.

You can delay any SDLT till you get back, delay the buyout.

Are you also covering the sisters CGT

you can't give notice if it is not your property your wife and sis need to do that.

Disjoint

getmore4less said:

How much is 1/2 the house worth?

How much rent are you going to lose through voids and why swap a good tenant for the potential of one that is not so good. 

Then you have the risk that your nice tenants take the hump and don't move quickly or find you have got something wrong with your notice.

You can delay any SDLT till you get back, delay the buyout.

Are you also covering the sisters CGT

you can't give notice if it is not your property your wife and sis need to do that.

It's slightly trickier. We want to sell our current main home as it's in pristine condition and there seems to be a window of opportunity in the market to do that. Most importantly, there is a substantial capital gain and at present I have no CGT to pay on this as it's our main home and my wife still lives there.

So if I sell and keep the cash, if I want to buy when we come back we will be hit with the higher SDLT and potentially a market that has inflated further. Today if we sell and buy something right away as my wife is still in the UK buying a main home there is no real question as to main residence. She is still in the UK and my kids are there - even if the intention is for her to come live with me, I don't think HMRC can judge you based on your future plans.

Agreed, I can't give notice, but my wife would. I'll definitely be putting a few things in perspective as ideally I would have wanted to keep them in, but at present the SDLT surcharge is worth a little over half a year of rent post tax. It's certainly not straightforward

davidmcn

Disjoint said:

getmore4less said:

How much is 1/2 the house worth?

How much rent are you going to lose through voids and why swap a good tenant for the potential of one that is not so good. 

Then you have the risk that your nice tenants take the hump and don't move quickly or find you have got something wrong with your notice.

You can delay any SDLT till you get back, delay the buyout.

Are you also covering the sisters CGT

you can't give notice if it is not your property your wife and sis need to do that.

Today if we sell and buy something right away as my wife is still in the UK buying a main home there is no real question as to main residence. She is still in the UK and my kids are there - even if the intention is for her to come live with me, I don't think HMRC can judge you based on your future plans.

If the intention is that it's only going to be occupied by her for a matter of months, I'm not so sure the relevant test is met:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812

Disjoint

davidmcn said:

Disjoint said:

getmore4less said:

How much is 1/2 the house worth?

How much rent are you going to lose through voids and why swap a good tenant for the potential of one that is not so good. 

Then you have the risk that your nice tenants take the hump and don't move quickly or find you have got something wrong with your notice.

You can delay any SDLT till you get back, delay the buyout.

Are you also covering the sisters CGT

you can't give notice if it is not your property your wife and sis need to do that.

Today if we sell and buy something right away as my wife is still in the UK buying a main home there is no real question as to main residence. She is still in the UK and my kids are there - even if the intention is for her to come live with me, I don't think HMRC can judge you based on your future plans.

If the intention is that it's only going to be occupied by her for a matter of months, I'm not so sure the relevant test is met:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812

If my wife decides to stay in the UK after April it wouldn't be an issue. At present she is a British citizen living and working in the UK selling and buying a main home. I live in rented accomodation abroad and come on the weekend to London. If she decides to come to live with me after April that would be after the fact and purchase. 
I definitely see what you mean, in that today I want them to be with me and live with me abroad. This is only an intention on my part however and on our future plans. To be frank I don't know the exact answer, and I definitely agree with part of what you are saying, but on the other hand if I look at the facts today there is no question as to my wife living in our main home in the UK. A bit too tired to think straight at the moment but thank you all for your comments none the less! What I know for sure post discussion is that I can't keep the tenants in for a main house!