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

oldbikebloke

Disjoint said:

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 accommodation 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!

sorry but INTENTION is a very relevant fact when it comes to CGT.
There is much case law around the circumstances of many different scenarios, but all boil down to intent at time of purchase, so yes, despite what you think, intent is capable of retrospective interpretation and in your case despite your immediate circumstances of buying a "replacement property" as a UK family home, the intent is that oit is a temporary measure pending wholesale family relocation "aboard".
as such it will be deemed to be a temporary home which therefore fails the acid test of: "permanence, continuity, or expectation  of continuity".
please understand that case law involves principles, not exact matches, so expectation of continuity in your case is zero since the plan is to move the family abroad.
read:  Goodwin v Curtis (HM Inspector of Taxes). [1998]
and also: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64455

SDLT_Geek

oldbikebloke said:

sorry but INTENTION is a very relevant fact when it comes to CGT.
There is much case law around the circumstances of many different scenarios, but all boil down to intent at time of purchase, so yes, despite what you think, intent is capable of retrospective interpretation and in your case despite your immediate circumstances of buying a "replacement property" as a UK family home, the intent is that oit is a temporary measure pending wholesale family relocation "aboard".
as such it will be deemed to be a temporary home which therefore fails the acid test of: "permanence, continuity, or expectation  of continuity".
please understand that case law involves principles, not exact matches, so expectation of continuity in your case is zero since the plan is to move the family abroad.
read:  Goodwin v Curtis (HM Inspector of Taxes). [1998]
and also: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64455

I agree.  The same tests of intention are relevant to SDLT and are referred to in the HMRC guidance here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812  

SusieT

You also need to allow for the fact that even if you issue a notice to the tenants, it could take a long time to actually get them out if they decided not to move when you want them to. They could (not saying they would), stay until a court gives notice to leave, then make you go through the rviction process IF they wanted to make you wait, so even if you sell your main home, the rental may not be empty for a long time so keep that in mind. The other alternative is that you tell them you want the property back when you sell yours and if they are on a rolling agreement they leave early and your sister wants you to make up her part of the rent while it is empty before you buy her out.

Disjoint

SDLT_Geek said:

oldbikebloke said:

sorry but INTENTION is a very relevant fact when it comes to CGT.
There is much case law around the circumstances of many different scenarios, but all boil down to intent at time of purchase, so yes, despite what you think, intent is capable of retrospective interpretation and in your case despite your immediate circumstances of buying a "replacement property" as a UK family home, the intent is that oit is a temporary measure pending wholesale family relocation "aboard".
as such it will be deemed to be a temporary home which therefore fails the acid test of: "permanence, continuity, or expectation  of continuity".
please understand that case law involves principles, not exact matches, so expectation of continuity in your case is zero since the plan is to move the family abroad.
read:  Goodwin v Curtis (HM Inspector of Taxes). [1998]
and also: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64455

I agree.  The same tests of intention are relevant to SDLT and are referred to in the HMRC guidance here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812  

Interesting one "Goodwin v Curtis" does not really answer the question - as family in London and has been in London, check. Family acquiring and remaining in London, check - it doesn't touch too much on intention. The SDLT manual however does talk about intention of the new property and this is where it could be an issue - as it specifically mentions intention unless an unexpected event - in my case what I will see is whether having had to move abroad due to the crisis is a valid event. It did frustrate our life time plans and is a once in a life time event. The plan was always to sell our main home and buy something else, covid forced me out of self employment into a job abroad.
I do however completely agree with you that intention really isn't there at the moment, so my argument is clearly not black and white. I'll ask solicitor on this one once we come to sell.

Regarding other comments re- sister in law etc.. Yes she will have to pay CGT. Yes she won't get income from the property once it's sold etc... But those are all things that happen when you sell something and she isn't financially clueless. She will get cash from the sale, it's not as if we are buying the property from her for £0. 
In terms of tenants I won't be evicting them but giving them a notice to vacate. It will be a 60 days notice - I've done that in the past and haven't had issues. It's a risk that I see as very minimal.

Only risk I am seeing is HMRC, and that's what I am trying to gauge and understand.
We want to sell main home to avoid CGT and roll into another main home. Living abroad is temporary and we are only in rented accommodation. 

getmore4less

We want to sell main home to avoid CGT

If only a temporary absence, then any CGT on your current home will be minimal if you come back to live in it.
The absence may qualify for relief if it meets the criteria
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65046

SDLT manual however does talk about intention of the new property and this is where it could be an issue - as it specifically mentions intention unless an unexpected event 

not read it, but suspect they mean post purchase event not a pre purchase one.

[Deleted User]

Disjoint said:

SDLT_Geek said:

oldbikebloke said:

sorry but INTENTION is a very relevant fact when it comes to CGT.
There is much case law around the circumstances of many different scenarios, but all boil down to intent at time of purchase, so yes, despite what you think, intent is capable of retrospective interpretation and in your case despite your immediate circumstances of buying a "replacement property" as a UK family home, the intent is that oit is a temporary measure pending wholesale family relocation "aboard".
as such it will be deemed to be a temporary home which therefore fails the acid test of: "permanence, continuity, or expectation  of continuity".
please understand that case law involves principles, not exact matches, so expectation of continuity in your case is zero since the plan is to move the family abroad.
read:  Goodwin v Curtis (HM Inspector of Taxes). [1998]
and also: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64455

I agree.  The same tests of intention are relevant to SDLT and are referred to in the HMRC guidance here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812  

Interesting one "Goodwin v Curtis" does not really answer the question - as family in London and has been in London, check. Family acquiring and remaining in London, check - it doesn't touch too much on intention. The SDLT manual however does talk about intention of the new property and this is where it could be an issue - as it specifically mentions intention unless an unexpected event - in my case what I will see is whether having had to move abroad due to the crisis is a valid event. It did frustrate our life time plans and is a once in a life time event. The plan was always to sell our main home and buy something else, covid forced me out of self employment into a job abroad.
I do however completely agree with you that intention really isn't there at the moment, so my argument is clearly not black and white. I'll ask solicitor on this one once we come to sell.

Regarding other comments re- sister in law etc.. Yes she will have to pay CGT. Yes she won't get income from the property once it's sold etc... But those are all things that happen when you sell something and she isn't financially clueless. She will get cash from the sale, it's not as if we are buying the property from her for £0. 
In terms of tenants I won't be evicting them but giving them a notice to vacate. It will be a 60 days notice - I've done that in the past and haven't had issues. It's a risk that I see as very minimal.

Only risk I am seeing is HMRC, and that's what I am trying to gauge and understand.
We want to sell main home to avoid CGT and roll into another main home. Living abroad is temporary and we are only in rented accommodation. 

60 days notice isn’t the statutory minimum at the best of times but given the Coronavirus Act 2020 it’s certainly under the required 3 months. That’s assuming the tenants have a periodic AST.