"Replacing an only or main residence" stamp duty exemption question

Alex1884

Hello, 
Me and my partner are currently in the process of buying a house together and we're unsure if we will need to pay the additional stamp duty for 2nd properties. This is our situation: 
- We're not married 
- My partner owns a house that she rents out and she owns the house that we have lived in together for the last 2 years. 
- I own a house that I rent out (i moved out of that one to move into my partners house when we decided to live together, but kept it to rent whilst we were newly living together!)
- We're now looking to buy a bigger house together (we will both be on the mortgage) and to fund the move we're selling my partners house at the same time (the one we have lived in for the last 2 years). 
- We're keeping the two properties that we rent. 
As we both live in the house we're selling would that count as entitling us to the the main residence exemption? The thing that is in my head that i think means we won't be exempt is that even though its our main residence, I will be going from owning 1 house to 2 in the transaction whereas my partner stays at owning 2 house. 

Hopefully that all made sense! Thanks in advance for any replies. 

AdrianC

Unmarried, so each viewed separately for SDLT purposes.

You - own A (let), do not own residence.
Partner - own B (residence), C (let).
Buy D jointly.

You - A before, A+D after. +3% SDLT.
Partner - B+C before, B+D after. Main residence replaced, no +3%.

If one joint owner is liable for +3%, it's on the entire purchase price. So, yes, +3%.

The only ways to avoid it are to get married, sell A before buying D, or partner buys D alone.

SDLT_Geek

The 3% extra will apply, assuming you are still not married when your partner sells the house you both live in.  

This is because of your circumstances, owning another property, but not being able to rely on the "replacement exception".  You cannot rely on the replacement exception as you are not disposing of a property you have lived in as your main residence, nor can you rely on a spouse having disposed of a property you have lived in.

Alex1884

That's great - thanks for the replies. That's really going to help us budget. 

My partner has been dropping hints about marriage but I think she wants a more romantic proposal than it simply being about saving us a few quid! 

littleirishboy

HI everyone - Could I add my situation to this question?

We are moving back home to the UK after living in China for several years and want to purchase a house in London. 
I have owned a house in Belfast (Standard SDLT rate my name only)) for 10 years and we bought a house (buy-to-let) in Birmingham last year (Higher SDLT rate in both our names)
If I sell the house in Belfast as my main residence will I then be able to get the standard rate on the London property? Also what would they require to see to prove it is my main residence? Surely if I show the Birmingham flat is rented out then the Belfast house has to be my main residence? Or should I make sure I have as much as possible going there (register to vote, council tax bills and bank statements?)

Thanks in advance for any help.

AdrianC

You own A and B. Neither has been your residence.
You are now buying C.
If you want to avoid +3%, you need to sell BOTH A&B before buying C.

Your main residence has not been Belfast, but China.

littleirishboy

Adrian,

Thanks for your help.

Maybe I wasn't clear that I lived in the Belfast house as my 'main' residence for about 5 years from 2008 - 2013 and indeed have kept paying the rates (council tax) there and am registered to vote there. I would still say it is my 'main' UK residence. We will be home in July and will use Belfast as residence for about 4 months at least  before buying a residence in London.

Also your logic doesn't make sense and is what is confusing me.  I have been told different things from different people hence I have had to search out further clarification. If we follow your logic then we would own 2 houses, both of which we would have paid the higher rate of stamp duty on. Surely everyone (or couple) deserve the right to own one property at the lower rate of Stamp Duty? This seems to me to be fair?

AdrianC

It may be your main UK residence, but you don't live there. It isn't your primary residence, and hasn't been for eight years.

You can try to claim the four months as your primary residence, but if the tax man looks closely (remember - it's HMRC you're lying to on the form, and they don't have a sense of humour), then do you think it'd stand up? Unlikely. The intent is clearly to only have it as a stopgap.

No, nobody "deserves the right" to own one at the lower rate. It doesn't work like that.
If you owned a £40k+ property in China, and none in the UK, you would pay +3% on your first UK purchase.
It's not my logic - it's Rishi's, Sajid's, Phil's, and George's. It's been the law for five years.

SDLT_Geek

I agree with @AdrianC

littleirishboy

Ok. But then surely if I use it as my main residence for over 180 days (or whatever the legal definition of normally resident is... it is about 180 days) then it would be my main resident?

is there a HMRC helpline number i can call on this?

AdrianC

littleirishboy said:

Ok. But then surely if I use it as my main residence for over 180 days (or whatever the legal definition of normally resident is... it is about 180 days) then it would be my main resident?

HMRC's website uses the phrase "main home".
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property
The actual legislation uses the phrase "only or main residence".
https://www.legislation.gov.uk/ukpga/2016/24/section/128/enacted
You are clearly viewing the Belfast property as a short-period stopgap between China and London - therefore it does not appear to be fair to describe it as your "main home" or "only or main residence", does it?

Ultimately, can YOU justify it to HMRC if they query it?
How much is that 3% likely to be?

is there a HMRC helpline number i can call on this?

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/stamp-duty-land-tax