Claiming back second home stamp duty

peacetrustlove

Hi all, I've got the following properties. 

1. BTL (Since 2007)
2. 1st Residential Home (Since 2007)
3. Second (New Home Purchased June 2021)

Here's my situation. I had one BTL property and one residential mortgage with my ex-wife where I used to live until last week. I have now purchased a new house without touching my first two properties. My ex-wife hasn't got a big income and could not get a mortgage to buy me out and the vendors of my new house weren't interested if I were to sell the house as that would have taken time. Also, I and my ex-wife are on excellent amicable terms. I managed to raise the deposit with help from my family.

I'm aware that I need to pay the entire stamp duty including that for the second home. But I want to clarify the situation about claiming back the second home part duty. 

I have the following choices

1. Sell the house (Not keen on this)
2. Get a BTL on that house
3. Get permission to lease on the current residential mortgage (with my ex-wife) (Easiest option)

The second home duty is a whopping £20,000 and I do not want to lose that money. If someone could advise me as to which of the above options are applicable for claiming the tax back? I want to keep the house, but I do not want to be hit by that £20,000.

I asked my solicitors, but they told me that it depends from case to case. I honestly thought that was not a professional answer. Money is tight right now and I want to move fast. 

Thanks for looking and thanks in advance to all those who can contribute.

[Deleted User]

peacetrustlove said:

Hi all, I've got the following properties. 

1. BTL (Since 2007)
2. 1st Residential Home (Since 2007)
3. Second (New Home Purchased June 2021)

Here's my situation. I had one BTL property and one residential mortgage with my ex-wife where I used to live until last week. I have now purchased a new house without touching my first two properties. My ex-wife hasn't got a big income and could not get a mortgage to buy me out and the vendors of my new house weren't interested if I were to sell the house as that would have taken time. Also, I and my ex-wife are on excellent amicable terms. I managed to raise the deposit with help from my family.

I'm aware that I need to pay the entire stamp duty including that for the second home. But I want to clarify the situation about claiming back the second home part duty. 

I have the following choices

1. Sell the house (Not keen on this)
2. Get a BTL on that house
3. Get permission to lease on the current residential mortgage (with my ex-wife) (Easiest option)

The second home duty is a whopping £20,000 and I do not want to lose that money. If someone could advise me as to which of the above options are applicable for claiming the tax back? I want to keep the house, but I do not want to be hit by that £20,000.

I asked my solicitors, but they told me that it depends from case to case. I honestly thought that was not a professional answer. Money is tight right now and I want to move fast. 

Thanks for looking and thanks in advance to all those who can contribute.

You only get to reclaim the additional SDLT by disposing of your previous main residence. Options 2 and 3 don’t involve you disposing of the property so won’t help you. 

Has your divorce been finalised. What is the financial order with respect to property number 2? 

peacetrustlove

We got divorced 5 years ago, but we had a mutual agreement, so nothing was written down in the court order. 

On the point of disposing of, I'd also like to bring to your attention my previous experience. 

I had purchased my first property in June 2004. I then got a BTL mortgage for that one and purchased my second home. This was in 2007. I wasn't charged any second home duty at that time as my first property was converted to a BTL. Are you absolutely sure that I need to dispose of it?

Secondly, my ex-wife is coming across some money in the next few months and she said she'd be able to buy me out. In that case, I've heard that there is a charge I need to pay to HMRC when I'm simply removing my name from the property deeds. Would you have any ideas about this? 

[Deleted User]

peacetrustlove said:

We got divorced 5 years ago, but we had a mutual agreement, so nothing was written down in the court order. 

On the point of disposing of, I'd also like to bring to your attention my previous experience. 

I had purchased my first property in June 2004. I then got a BTL mortgage for that one and purchased my second home. This was in 2007. I wasn't charged any second home duty at that time as my first property was converted to a BTL. Are you absolutely sure that I need to dispose of it?

Secondly, my ex-wife is coming across some money in the next few months and she said she'd be able to buy me out. In that case, I've heard that there is a charge I need to pay to HMRC when I'm simply removing my name from the property deeds. Would you have any ideas about this? 

The manual is available on the internet for you to read yourself. 

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

ETA. Higher rate SDLT introduced 1st April 2016. 

Caz3121

peacetrustlove said:

I had purchased my first property in June 2004. I then got a BTL mortgage for that one and purchased my second home. This was in 2007. I wasn't charged any second home duty at that time as my first property was converted to a BTL. Are you absolutely sure that I need to dispose of it?

the additional second home duty was introduced in 2016 so did not apply to your previous purchase (but would if in the same situation now)

[Deleted User]

Haha, I read 2007 as 2017…..Doh!!! 

SDLT_Geek

I agree that the 3% extra SDLT was not due on a 2007 purchase (the surcharge was introduced in 2016), but is due on your 2021 purchase.  To be entitled to a refund you would have to dispose of all of your interest in the previous matrimonial home, where you were living, until last week.  So her buying you out might work well.

You say "I've heard that there is a charge I need to pay to HMRC when I'm simply removing my name from the property deeds. Would you have any ideas about this?"

Perhaps someone was thinking of capital gains tax, but that should not be an issue if you have lived in the former matrimonial home throughout your ownership of it.  Perhaps they were thinking of whether she has to pay SDLT on acquiring your share in the property.

AdrianC

For the 3% to be £20k, the purchase must be ~£670k, right?

The 3% should not be a surprise - this law has been in place for five years.

Your purchase has taken you from two properties owned to three. If you want to reclaim the 3%, you need to sell your previous residence within the next three years.