Is additional rate Stamp Duty due in these circumstances?

dwsjarcmcd

Asking for a friend, circumstances are that they have been living in a rented house for nearly 3 years and also have a long-standing B2L property.  They have decided to buy a new, much smaller property as their main residence (P.P. circa £140k) and are actively looking now.  Therefore, they will have 2 properties but as this new one is their main residence, will this be subject to additional rate Stamp Duty?

Also, in about 3 years, the plan is to buy a much larger property as their main residence (circa £500k) and retain the other two properties as B2L's.  When this happens, will they pay additional rate Stamp Duty on this house or not, given they will then have 3 properties?

Doozergirl

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

dwsjarcmcd

Doozergirl said:

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

Thanks for that, that was my original thought too but in both cases they would have purchased  their main residence (1 three years ago and one in 3 years time) having retained the current planned property as a B2L.  

davidmcn

dwsjarcmcd said:

Doozergirl said:

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

Thanks for that, that was my original thought too but in both cases they would have sold their main residence (1 three years ago and one in 3 years time) and replaced it with another property.  

Your OP said they were retaining the properties rather than selling?

grumiofoundation

dwsjarcmcd said:

Doozergirl said:

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

Thanks for that, that was my original thought too but in both cases they would have sold their main residence (1 three years ago and one in 3 years time) and replaced it with another property.  

In your OP you don't mention that they are selling their main residence(s) - you say the properties will be kept as BTLs?

dwsjarcmcd

davidmcn said:

dwsjarcmcd said:

Doozergirl said:

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

Thanks for that, that was my original thought too but in both cases they would have sold their main residence (1 three years ago and one in 3 years time) and replaced it with another property.  

Your OP said they were retaining the properties rather than selling?

True, apologies, I have now corrected my last post!  They plan to retain the one they want to buy now as a future BTL but the house they replace it with will be their main residence.  So at the time they purchase these house, they will be their main residences

davidmcn

dwsjarcmcd said:

davidmcn said:

dwsjarcmcd said:

Doozergirl said:

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

Thanks for that, that was my original thought too but in both cases they would have sold their main residence (1 three years ago and one in 3 years time) and replaced it with another property.  

Your OP said they were retaining the properties rather than selling?

True, apologies!  They plan to retain the one they want to buy now as a future BTL but the house they replace it with will be their main residence.  So at the time they purchase these house, they will be their main residences

The concession only applies if they sell their previous main residence at (roughly) the same time that they buy a new main residence. I know it's rather confusingly referred to as "replacing" your main residence, but that doesn't just mean moving house, you need to sell.

[Deleted User]

The clue is in the name, “Higher rate of SDLT for the purchase of additional properties.” Your friend currently own 1 property he’s buying an additional property for £140k. Then a few years down the line he’ll buy yet another additional property. 

If any of this confuses you or your friend then read the manual. 

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

AdrianC

Scenario 1.
Live in A (not owned). Own B (not residence)
Buy C, retain B.
Yes, +3% on C.

The only get-out here is if they lived in an owned residence before the rental, which they sold (living in B wouldn't count) within 3yrs of completion on the purchase of C.

Scenario 2.
Own B (not residence), own and live in C.
Buy D. Do not sell C. Selling B would be irrelevant.
Yes, +3% on D.

No get-out except for selling C.

saajan_12

dwsjarcmcd said:

davidmcn said:

dwsjarcmcd said:

Doozergirl said:

They would pay the additional rate on both of them as they would be increasing the number of properties they own.  

Unless selling and replacing a house that was a main residence, the additional 3% applies.  

Thanks for that, that was my original thought too but in both cases they would have sold their main residence (1 three years ago and one in 3 years time) and replaced it with another property.  

Your OP said they were retaining the properties rather than selling?

True, apologies, I have now corrected my last post!  They plan to retain the one they want to buy now as a future BTL but the house they replace it with will be their main residence.  So at the time they purchase these house, they will be their main residences

Maybe clarify what properties they have owned / will own, with dates on when they were bought / sold / lived in.. 

Sounds like they used to live in an owned property (A) and had a BTL (B).
Then sold A and moved to rented. 
Then will buy a new main residence C (still owning B  )
Then will buy a new main residence D (still owning B + C)

Correct?

dwsjarcmcd

Maybe clarify what properties they have owned / will own, with dates on when they were bought / sold / lived in.. 

Sounds like they used to live in an owned property (A) and had a BTL (B).
Then sold A and moved to rented. 
Then will buy a new main residence C (still owning B  )
Then will buy a new main residence D (still owning B + C)

Correct?

Yes, that is correct