Stamp duty - replacing residence

Jrana

We currently own two properties - the house we live in in Warrington and a flat in Southampton that is let out. We are in the process of selling our current home, moving to London and buying a house there. Most likely, we'll sell the current house, move into a rented property in the London area we want to move to, and then start looking for a house to buy.

Sorry for the long winded background. My question is, will we have to pay the 3% stamp duty surcharge on the London home because we already own the Southampton flat? 

I was under the impression that we would definitely be charged the extra 3% simply because of the rental flat. But my colleague today insisted that I wouldn't because it was a replacement of my main residence.

So I thought I'd ask the good people here. Thanks.

J

MWT

Your colleague is correct.

You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

CSL0183

MWT said:

Your colleague is correct.

You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

Only if the house in Warrington is sold beforehand otherwise the 3% will be charged at point of entry. It’s possible to recoup that fee back if the property is then sold within x amount of time. 

If you buy a BTL before a main residence then you will escape the charge. If you buy a BTL property after having a main residence you will incur the charge. 

Jrana

MWT said:

Your colleague is correct.

You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

That's great to know. But wouldn't the rented property in London we move into temporarily become the "main residence"?

K_S

Jrana said:

MWT said:

Your colleague is correct.

You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

That's great to know. But wouldn't the rented property in London we move into temporarily become the "main residence"?

@Jrana Don't quote me on this but I think you get 3 years from when the Warrington house was sold to use the "main residence" exemption for your next house purchase.

MWT

K_S said:

@Jrana Don't quote me on this but I think you get 3 years from when the Warrington house was sold to use the "main residence" exemption for your next house purchase.

There is a 3 year limit on refunds if you have not sold your main residence at the point when you buy your next main residence and so you have to pay the 3%, but AFAIK as long as you are replacing a main residence that you no longer own there is no particular time limit.

The rental property never becomes your main residence for SDLT purposes as you do not own it...

Jrana

Thanks MWT and KS, that is indeed music to my ears and means we should be able to buy now.