Stamp Duty Refund

nochar3

Good morning all,

I have a question regarding Stamp Duty Land Tax, which I am really hoping someone can help me with. It is to do with the possibility of obtaining a refund of the higher rates of SDLT paid for a purchase when already owning an additional property. 

I understand from the gov.uk website that I can apply for a repayment of the higher rates of SDLT paid for the purchase of an additional property, if I sell what was previously my main home within 3 years of buying the new property. 

In my situation, let's say that I own House 1, which I previously lived in but have rented out for the last 5 years and I also own House 2, which I currently live in and plan to sell to move into a new home (House 3). 

If I keep House 1 when selling House 2, I will have to pay higher SDLT for House 3, as it will be an additional property. I have no issues with this. 

My questions is whether I would be entitled to a refund of the extra SDLT paid for the purchase of House 3, if I end up selling House 1 within 3 years of that purchase. 

If you changed House 1 and 2 around in the above example, I am pretty sure that I would be entitled to the refund as I will be selling my main residence within 3 years of the purchase. 

My confusion is whether 'main residence' would include the property that I used to reside in but now rent out. 

I do not know if this is the best place to ask this question, but I would really appreciate any guidance or feedback. I have not sold either House 1 or 2 yet, as I am looking for some clarification on this query before deciding what to do later this year. 

Thank you so much in advance,
Charlie 

user1977

If you're replacing House 2 with House 3, you just pay the standard rate on your purchase of House 3, because that's replacing your main residence (assuming that by "currently living in it" you mean it is your main residence). Doesn't matter that you also still own House 1.

SDLT_Geek

nochar3 said:

Good morning all,

I have a question regarding Stamp Duty Land Tax, which I am really hoping someone can help me with. It is to do with the possibility of obtaining a refund of the higher rates of SDLT paid for a purchase when already owning an additional property. 

I understand from the gov.uk website that I can apply for a repayment of the higher rates of SDLT paid for the purchase of an additional property, if I sell what was previously my main home within 3 years of buying the new property. 

In my situation, let's say that I own House 1, which I previously lived in but have rented out for the last 5 years and I also own House 2, which I currently live in and plan to sell to move into a new home (House 3). 

If I keep House 1 when selling House 2, I will have to pay higher SDLT for House 3, as it will be an additional property. I have no issues with this. 

I have issues with this!  If you sell House 2, which seems to be your current residence, when buying House 3, then the 3% extra should not apply in the first place, even though you retain House 1.  That is because you seem to meet all of the criteria for the "replacement exception".

My questions is whether I would be entitled to a refund of the extra SDLT paid for the purchase of House 3, if I end up selling House 1 within 3 years of that purchase. 

If you changed House 1 and 2 around in the above example, I am pretty sure that I would be entitled to the refund as I will be selling my main residence within 3 years of the purchase. 

My confusion is whether 'main residence' would include the property that I used to reside in but now rent out. 

I do not know if this is the best place to ask this question, but I would really appreciate any guidance or feedback. I have not sold either House 1 or 2 yet, as I am looking for some clarification on this query before deciding what to do later this year. 

Thank you so much in advance,
Charlie 

It seems you misunderstand the rules and the position is better than you think.  The conditions for the replacement exception are set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

nochar3

user1977 said:

If you're replacing House 2 with House 3, you just pay the standard rate on your purchase of House 3, because that's replacing your main residence (assuming that by "currently living in it" you mean it is your main residence). Doesn't matter that you also still own House 1.

If this is correct, that would change things quite drastically. I will have to look into it.

When I bought House 2, I was going to be living in it as my main residence but it still counted as an additional property and so additional SDLT was paid. 

user1977

nochar3 said:

user1977 said:

If you're replacing House 2 with House 3, you just pay the standard rate on your purchase of House 3, because that's replacing your main residence (assuming that by "currently living in it" you mean it is your main residence). Doesn't matter that you also still own House 1.

When I bought House 2, I was going to be living in it as my main residence but it still counted as an additional property and so additional SDLT was paid. 

Yes, because you were increasing the number of residential properties you owned. You won't get a refund of that.

nochar3

SDLT_Geek said:

nochar3 said:

Good morning all,

I have a question regarding Stamp Duty Land Tax, which I am really hoping someone can help me with. It is to do with the possibility of obtaining a refund of the higher rates of SDLT paid for a purchase when already owning an additional property. 

I understand from the gov.uk website that I can apply for a repayment of the higher rates of SDLT paid for the purchase of an additional property, if I sell what was previously my main home within 3 years of buying the new property. 

In my situation, let's say that I own House 1, which I previously lived in but have rented out for the last 5 years and I also own House 2, which I currently live in and plan to sell to move into a new home (House 3). 

If I keep House 1 when selling House 2, I will have to pay higher SDLT for House 3, as it will be an additional property. I have no issues with this. 

I have issues with this!  If you sell House 2, which seems to be your current residence, when buying House 3, then the 3% extra should not apply in the first place, even though you retain House 1.  That is because you seem to meet all of the criteria for the "replacement exception".

My questions is whether I would be entitled to a refund of the extra SDLT paid for the purchase of House 3, if I end up selling House 1 within 3 years of that purchase. 

If you changed House 1 and 2 around in the above example, I am pretty sure that I would be entitled to the refund as I will be selling my main residence within 3 years of the purchase. 

My confusion is whether 'main residence' would include the property that I used to reside in but now rent out. 

I do not know if this is the best place to ask this question, but I would really appreciate any guidance or feedback. I have not sold either House 1 or 2 yet, as I am looking for some clarification on this query before deciding what to do later this year. 

Thank you so much in advance,
Charlie 

It seems you misunderstand the rules and the position is better than you think.  The conditions for the replacement exception are set out here: 

Thanks for this! Really appreciate it. I guess I was looking at this wrong the entire time. I will have a good read over the information on that website.