Stamp Duty Rates for 2022 - replacement purchase

Irwinsing

Can you clarify stamp duty rates on purchase of a property which will replace a property sold as partial main residence (13 years) /partially a rental (5 years).  Likely purchase price £320,000.   No other property ownership .  But live with husband in his house which I have no financial interest in.  I am not on his title deeds and he would not go on mine.

thank you.  

runforlife

Depends when you are purchasing it. 

On a purchase price of £320k until 30 June it’s nil but if it’s an additional property then it’s 3% on the whole purchase price. 

Between 1 July and 30th Sept it’s 5% and 8% for additional property 

From 1 October 2021 it’s 5% and 8% for additional property However... Stamp Duty Land Tax can be complicated. 

Presuming you’ll still live with your husband in a different house (have I read that correctly?) then Stamp duty rates have increased for anyone purchasing an additional property. Additional property types include buy to let investments and second homes. From April 2016 a 3% surcharge has been applied on top of the normal SDLT rate (resulting in the 8% figure)

The higher stamp duty rates only apply to additional residential property. Land and other types of property are not normally considered when determining ownership of additional property for stamp duty purposes.

The higher rates of stamp duty should not apply when moving home. Normal rates of stamp duty will apply for anyone replacing a main residence even if they own two properties in the short term.

If a previous home is not sold immediately, stamp duty will be calculated at the higher rate and a refund may be claimed later.

A SD refund can be claimed up to 12 months after selling a previous home as long as the old home is sold within 3 years of purchasing the new one. 

Regarding the sale of your property has that gone through? Have you considered capital gains tax? 

You may wish to speak to a tax advisor. 

https://www.gov.uk/stamp-duty-land-tax

Irwinsing

Thank you so much for this.
No sale yet just planning ahead (hence saying 2022).  I have got my head around CGT with PRR etc on sale and I can ‘live’ with that (again understood from hugely helpful input on this forum) .  But if I repurchase (doing a swap so to speak) I just cannot grasp the additional home bit . It would be the only property in my name.  If my husband died I would be homeless (his property goes to his kids -we are both on second marriage).  I simply want to secure my future (both in our 70’s) .  But with big difference in tax seems a non starter.  Would the 8% be on the full purchase price (not just above £125,000).  

Covid and lockdown is just giving me too much thinking time I guess.  But I like to consider my choices.

p00hsticks

Irwinsing said:

Thank you so much for this.
No sale yet just planning ahead (hence saying 2022).  I have got my head around CGT with PRR etc on sale and I can ‘live’ with that (again understood from hugely helpful input on this forum) .  But if I repurchase (doing a swap so to speak) I just cannot grasp the additional home bit . It would be the only property in my name.  If my husband died I would be homeless (his property goes to his kids -we are both on second marriage).  I simply want to secure my future (both in our 70’s) .  But with big difference in tax seems a non starter.  Would the 8% be on the full purchase price (not just above £125,000).  

Covid and lockdown is just giving me too much thinking time I guess.  But I like to consider my choices.

The fact that it's the only home you own isn't relevant for SDLT purposes - it's whether it's your main residence or not. If you are not replacing your current main residence (which you are not) then it counts as an additional property. Even though you don't own the property you currently live in, for SDLT purposes a married couple are treated as a single unit.

If you are concerned about being homeless and securing your future why not simply retain the existing property you own and lived in before you moved in with your husband ? 

Irwinsing

Thank you . I simply find my current property stressful in terms of tenants, would like to replace to be nearer daughter for future.    I find it amazing to be penalised just for trying to be sensible/ am not rebuying to make money.  Ah well so be it.  

runforlife

Here’s an idea. Why not put yourself onto your husbands property but only in case of his death preceding yours? You would be ‘tenants in common’ which would secure your “home” until you die. 

https://www.gov.uk/joint-property-ownership

Then on your death, his children would receive the proceeds of his estate including the full proceeds of the house. A will would be required of course, and it may not be quite as simple as that. It may feel “uncomfortable “ but he is your husband, and I’m sure he wouldn’t want you to be worrying about your future, Good luck. 

stig

The important thing to remember when looking at number of properties owned is that the test is applied to both you and your husband, even if you aren’t joint owners. This is to stop spouses getting around the multiple dwelling test by owning two properties as a couple, but owning one property in each name and claiming they each only own one property.

if you sell your rented out property and buy another the Stamp Duty surplus will apply as you and your husband will own two properties at the end of the day. You can’t claim the replacement of main residence exemption as you haven’t lived in your old house in the last three years, and there’s no general “replacement” exemption that would apply.

the key problem here seems to be that while you and your husband own a property each and would like to keep these finances separate, his property is straightforward (you both live in it)  and yours is complicated (you need to rent it out and be a landlord to stay on the property ladder)

a good starting point might be to discuss with your husband how he would feel about living in your property and renting out his? This both provides an opportunity to replace your property without the Stamp Duty surcharge if you are genuinely replacing both of your main residence, and to test out if the current arrangement, where  you live in a property you could be expected to leave at any time while unable to move into your own, tenanted, property  is really what both of you want.

Irwinsing

Thank you all for your input.  Not easy but may be best to stick with my current property or just ‘bite my lip’ and pay the surcharge if I really feel the need to change ( not an immediate plan just wanted to consider the financial scenario).  Does seem unfair though.