Do I need to pay stamp duty or not? really confused.

user1168934

I have flat where I live at the moment. I am buying another property due to complete at the end of June. The plan is to move into the new property and rent out the one I already own.

I checked a few months ago whether I am liable to pay a stamp duty and I believe it was saying that I should because it is a second property.

I have just checked again on the SDLT gov calculator and it says I have to pay £0. I think this is because there was a question that said "are you replacing your main residence?" and I chose "Yes".

Can someone who knows kindly clarify please?

p00hsticks

No, you are not replacing your main residence. That would mean you sell your old residence at the same time as you buy your new one, and end up with the same number of proeprties. You are starting with one and will finish with two, so are liable for the 3% additional charge

Alter_ego

But you're not "replacing" You are buying a second one

[Deleted User]

user1168934 said:

I have flat where I live at the moment. I am buying another property due to complete at the end of June. The plan is to move into the new property and rent out the one I already own.

I checked a few months ago whether I am liable to pay a stamp duty and I believe it was saying that I should because it is a second property.

I have just checked again on the SDLT gov calculator and it says I have to pay £0. I think this is because there was a question that said "are you replacing your main residence?" and I chose "Yes".

Can someone who knows kindly clarify please?

You are not selling your current home and buying a new one so in terms of SDLT you are not replacing your main residence therefore the higher rate of SDLT for the purchase of additional residential properties will apply because you are purchasing an additional residential property. 

AdrianC

user1168934 said:

I have flat where I live at the moment. I am buying another property due to complete at the end of June. The plan is to move into the new property and rent out the one I already own.

I checked a few months ago whether I am liable to pay a stamp duty and I believe it was saying that I should because it is a second property.

I have just checked again on the SDLT gov calculator and it says I have to pay £0. I think this is because there was a question that said "are you replacing your main residence?" and I chose "Yes".

Can someone who knows kindly clarify please?

You own A, and living in it.
You are buying B to live in, but will not sell A.
You are going from owning one property to two. Additional property, every day of the week.

How much is the purchase price, and which of the UK nations is it in?

user1168934

Thanks for clearing that up folks.

sandyring

How does this work if you sold you're main residence back in 2019 and have been looking but due to covid etc, you have been living in one of your rental properties?.

I'm just about to complete on 'my main residence' albeit I will still have to live in my rental until I've ironed various things out, some renovations have been done etc.

I'm getting different answers depending on who I ask, the solicitor is even saying this is a grey area and it's self declaration so it's down to me.

SDLT_Geek

sandyring said:

How does this work if you sold you're main residence back in 2019 and have been looking but due to covid etc, you have been living in one of your rental properties?.

I'm just about to complete on 'my main residence' albeit I will still have to live in my rental until I've ironed various things out, some renovations have been done etc.

I'm getting different answers depending on who I ask, the solicitor is even saying this is a grey area and it's self declaration so it's down to me.

The reason for the confusion is some misleading HMRC guidance suggesting that to come within the "replacement exception" it must be the most recent main residence which is sold.  That is wrong, there are prescriptive conditions set out at SDLTM09800 to meet. 
There is a detailed case study explaining it: https://www.blakemorgan.co.uk/stamp-duty-land-tax-3-surcharge-case-study-on-replacement-of-only-or-main-residence/

capsy87

Whilst the previous posts are technically correct, there is currently a loophole with this.  I bought a house, lived it in, then rented it out. I then bought a 2nd house as my main residence. I did not have to pay additional sdlt. Had I done it in reverse (ie main house then 2nd to rent out), I would have been liable for additional sdlt. This was recently reported in the Times newspaper so I sent that to my solicitor who confirmed it is correct. I don't have a mortgage on the rented property so that may make a difference but worth checking it out. Saved me £17k though I am going to be sling my rented house shortly so would have got the refund. Nice surprise though for asking the question. Hope this helps. 

[Deleted User]

capsy87 said:

Whilst the previous posts are technically correct, there is currently a loophole with this.  I bought a house, lived it in, then rented it out. I then bought a 2nd house as my main residence. I did not have to pay additional sdlt. Had I done it in reverse (ie main house then 2nd to rent out), I would have been liable for additional sdlt. This was recently reported in the Times newspaper so I sent that to my solicitor who confirmed it is correct. I don't have a mortgage on the rented property so that may make a difference but worth checking it out. Saved me £17k though I am going to be sling my rented house shortly so would have got the refund. Nice surprise though for asking the question. Hope this helps. 

That's not a loophole that's straight up tax evasion if you did it after 1st April 2016 and the BTL property was worth £40k+ at the time.  It is very worrying if your solicitor relied on a newspaper article instead of reading the HMRC manual.  

SDLT_Geek

capsy87 said:

Whilst the previous posts are technically correct, there is currently a loophole with this.  I bought a house, lived it in, then rented it out. I then bought a 2nd house as my main residence. I did not have to pay additional sdlt. Had I done it in reverse (ie main house then 2nd to rent out), I would have been liable for additional sdlt. This was recently reported in the Times newspaper so I sent that to my solicitor who confirmed it is correct. I don't have a mortgage on the rented property so that may make a difference but worth checking it out. Saved me £17k though I am going to be sling my rented house shortly so would have got the refund. Nice surprise though for asking the question. Hope this helps. 

From what you say you should have paid the extra 3% SDLT.  The "replacement exception" only helps if you have sold or disposed of a previous home.  Perhaps there is more to the background than you let on, such as another sale you can rely on.  You will find the detailed conditions here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800 

The specialist referred to in the The Times article said he had over 100 calls in the day after the article from people thinking they did not have to pay the 3% surcharge, only two were right!!