Moving main residence, second home stamp duty surcharge

shineondiamond

I am planning to move from the house I have lived in for 10 years to another one that will be my new home. My current house is a terrace in a northern town centre where demand and prices are depressed, though the rental market is still there, so I planned to get equity out of it on a buy to let, and rent it out rather than selling, and using that in the purchase of my new home. But I was told I would be charged a 3 percent second home tax on the (higher) value of my new home if I did this, I am 62 and retired.

Pixie5740

shineondiamond said:

I am planning to move from the house I have lived in for 10 years to another one that will be my new home. My current house is a terrace in a northern town centre where demand and prices are depressed, though the rental market is still there, so I planned to get equity out of it on a buy to let, and rent it out rather than selling, and using that in the purchase of my new home. But I was told I would be charged a 3 percent second home tax on the (higher) value of my new home if I did this, I am 62 and retired.

You are purchasing an additional residential property therefore the higher rate of SDLT for the purchase of residential properties will apply to the purchase. If you sell your current residence within 3 years of purchasing the new property you can claim the higher rate of SDLT back. 

Slithery

Did you have a question?

Yes, you will have to pay the stamp duty for an 'additional property'. It isn't just 3% - it's an extra 3% on top of the stamp duty that would normally be due.

justwhat

Second home tax legislation was to clamp down on property investors.(has turned out to be a nice money maker for .gov)

Before you rent out make sure you are fully aware of the legislation around landlords. being a LL is not as good as it once was.

Renting out residential property is not worth the hassle in my opinion anymore. Eviction is  a nightmare and supplying  social housing to the unemployed has many pitfalls. 

A tenant with no assets can rip you off for thousands of pounds and get away with it. Eviction "can" take months/years. There is next to no recourse for an LL who has a bad or awkward tenant.

davilown

You’re not selling your main residence so yes, you will pay the surcharge 

Flugelhorn

shineondiamond said:

I am planning to move from the house I have lived in for 10 years to another one that will be my new home. My current house is a terrace in a northern town centre where demand and prices are depressed, though the rental market is still there, so I planned to get equity out of it on a buy to let, and rent it out rather than selling, and using that in the purchase of my new home. But I was told I would be charged a 3 percent second home tax on the (higher) value of my new home if I did this, I am 62 and retired.

I am 62 and retired as well, unfortunately this doesn't get us out of the 3% second home SDLT. I might just be about to consider paying it again myself - good luck with your plan but be careful about being a landlord

shineondiamond

Thanks for the advice. It doesn't really fit the spirit of the purpose of the law, I'm not getting a holiday home, it's because there is a difficult to sell deprived area. I'm a bit beleaguered by crime, and want to leave fast, but don't want to misrepresent that to a buyer, a renter is committing less. It is a shame the tax will be on the one I'm buying, as my old one will be the extra property. Thanks for the information. 

user1977

shineondiamond said:

It doesn't really fit the spirit of the purpose of the law

It does, as the purpose was to free up more properties for owner-occupiers by deterring you from becoming a landlord.

UnsilentMinority

shineondiamond said:

Thanks for the advice. It doesn't really fit the spirit of the purpose of the law, I'm not getting a holiday home, it's because there is a difficult to sell deprived area. I'm a bit beleaguered by crime, and want to leave fast, but don't want to misrepresent that to a buyer, a renter is committing less. It is a shame the tax will be on the one I'm buying, as my old one will be the extra property. Thanks for the information. 

Your new purchase will be the 'extra' property.