Stamp Duty second property - two options

matchedbetting1

Hi, 

I've extensively scoured both the government website and this forum and THINK I've got a handle on the answer but just wanted to sense check.

Husband and I plan to move to bigger family home in next 3 years (current main residence to new main residence) and are in a position to do this right away (pending the right house coming on the market), taking out an increased mortgage plus putting some savings towards this.

We are also in an immediate position to cash purchase a second smaller property which we would let out. Before anyone suggests putting this money towards the larger home in lieu of the mortgage, our circumstances are better suited to having a second property at this time and can afford the higher mortgage comfortably etc.

My question is which order should we make these purchases in to have to pay the least SDLT overall? Our plan A is to purchase the second property, pay the higher SDLT after increasing our property ownership to 2. THEN move to a larger family home, planning to complete the purchase and sale on the same day. Would this mean we would have to pay the higher SDLT and reclaim? Are we eligible to reclaim? Or would we not have to pay it at all on the main residence transfer? We wouldn't have the cash to pay this and reclaim so this is only an option if we do not have to pay the higher rate on the main family home residence. Otherwise  (plan we would need to complete the bigger purchase first then the second smaller property. Using this info below from the gov. website I believe we could go with our plan A and not have to pay the higher rate once we eventually move to our larger home?: 

When the higher rates do not apply

The higher rates do not apply to certain people, property and transactions.

People

Do not include anyone who will both:

• use your new property as their main home
• have sold or given away the last main home they owned before you buy your new home (or on the same day)

Thanks so much in advance for any help.

SpiderLegs

It makes no difference. 

You don’t pay higher rate on the move regardless of whether you own the rental or not.

you do pay higher rate on the rental regardless of whether you have made the move or not. 

matchedbetting1

Great thank you for your help! Didn't want to get hit with a big tax bill we had to reclaim on the higher value move. We have no issue with paying the higher rate on the second property (low value). 

We will always be in a position where we will be in a chain with the main residence, so will always sell and buy on the same day. 

Great to know both options are on the table. Just trying to find the right properties for us now!!

Thank you.