Welsh Stamp Duty

RJC74

I currently own 2 houses both in England. They are my home and a buy to let which provides part of my income and will be my pension.

I am in the process of moving to Wales and so am buying a third house.

The house I am buying will be my home. The house I am currently living in will become a second investment property, rented out to provide me with income.

I am being told that I will need to pay the higher rate stamp duty on the new property as I am not selling my current residence. As this will never be my residence again and will only ever be an investment property it seems wrong to me. The other rental property that I own doesn't seem to be an issue just the house that I have lived in. It makes no sense as they will both have the same status in the future - investment properties.

I would be grateful for any clarification or advise.

Slithery

Whoever told you that you are liable for the 'additional property' higher rate is correct. The clue is in the name 'additional property'.
The only way to avoid this is to sell your current main residence.

SDLT_Geek

Yes, the 4% extra Land Transaction Tax will be due.

RJC74

Thank you for the responses, I am confused because the gov.wales website says the following....

"There are different rules if you already own one or more residential properties and you may need to pay the higher residential rates. However, if you're replacing your main residence the higher rates may not apply."

I am replacing my main residence. So why do the higher rates apply?

SDLT_Geek

RJC74 said:

Thank you for the responses, I am confused because the gov.wales website says the following....

"There are different rules if you already own one or more residential properties and you may need to pay the higher residential rates. However, if you're replacing your main residence the higher rates may not apply."

I am replacing my main residence. So why do the higher rates apply?

You are not "replacing" your main residence within the meaning of the rules as you are not selling / disposing of the old one.

AdrianC

You own A (residence) and B (let).
You are buying C (residence).

Additional Property +3% LTT, every day of the week. You are going from two properties to three.

If you were to sell A within three years of buying C, you could reclaim the additional LTT, because you are replacing your main residence. If you do not sell A, you are clearly not replacing it.

user1977

"Replacing" your main residence doesn't just mean "moving house", otherwise that would be a gaping wide loophole - just move house every time you add to your property portfolio...

Slithery

'Replacing' in the context of LTT means selling. You aren't selling it, it will still be under your ownership.
It would be a pretty obvious loophole if a LL could avoid the extra tax on all their properties by just living in them for a couple of weeks before buying the next one.

RJC74

Slithery said:

'Replacing' in the context of LTT means selling. You aren't selling it, it will still be under your ownership.
It would be a pretty obvious loophole if a LL could avoid the extra tax on all their properties by just living in them for a couple of weeks before buying the next one.

I've lived in it for 21 years. I plan to stay in the new house for a long time too.

Thank you all for your responses. I am increasing my number of properties, I just wanted to clarify the rules in Wales as I maintain that 'replacing' my main (in fact only) residence is exactly what I am doing and at no point has anyone said I would have to sell my buy to let to be eligible for a tax refund, only the house that I have lived in.

AdrianC

RJC74 said:
I just wanted to clarify the rules in Wales

They're the same as in England when it comes to this. Just the same as when the additional property +3% was introduced in 2015.

as I maintain that 'replacing' my main (in fact only) residence is exactly what I am doing

No, "replacing" means starting with two properties and finishing with two properties.

Going from A+B to C+B would be replacing A with C.
Going from A+B to A+B+C is no kind of replacement, is it?

and at no point has anyone said I would have to sell my buy to let to be eligible for a tax refund, only the house that I have lived in

Because going from A+B to A+C would not be replacing A with C, your former primary residence with your new primary residence.

That "replacement" clause is there to stop people with a let property from getting hit with the +3% when they move home in a normal chain-style situation without increasing their portfolio. You aren't doing that. You are buying an additional property.

SDLT_Geek

AdrianC said:

You own A (residence) and B (let).
You are buying C (residence).

Additional Property +3% LTT, every day of the week. You are going from two properties to three.

If you were to sell A within three years of buying C, you could reclaim the additional LTT, because you are replacing your main residence. If you do not sell A, you are clearly not replacing it.

Yes, except the enlightened Welsh have made it 4% extra.