How long can you own 2 homes for without paying higher stamp duty?

Tinangel

I want to move house. I would like to buy the house I'm moving to slightly before selling the one I live in to make moving easier (perhaps with the help of a bridging loan, or by getting a mortgage that won't punish me for paying into it when I sell the house I live in.)
But the stamp duty tax is greater when you already own a house - do you really have to be homeless before you can buy a house at the lower level of tax? Is it OK if your house is on the market when you buy your next place? or is there a time limit on temporarily owning 2 places? Thanks for your help!

SDLT_Geek

Tinangel said:

I want to move house. I would like to buy the house I'm moving to slightly before selling the one I live in to make moving easier (perhaps with the help of a bridging loan, or by getting a mortgage that won't punish me for paying into it when I sell the house I live in.)
But the stamp duty tax is greater when you already own a house - do you really have to be homeless before you can buy a house at the lower level of tax? Is it OK if your house is on the market when you buy your next place? or is there a time limit on temporarily owning 2 places? Thanks for your help!

It depends on where you are buying.  If in England then the relevant rules are stamp duty land tax. 

If retaining the old home when you buy the new one, the extra 3% SDLT would normally be due.  You would usually be able to recover the extra 3% if the sale of the old home is completed within three years of the completion of the purchase of the new home.

user1977

If ownership overlaps at all then you need (initially at least) to pay the higher rate. So completion of your sale needs to be before, or simultaneous. If we're talking only a few days then your solicitor might be prepared to take a view on it (if contracts are exchanged for your sale) and just delay submitting your return until after the sale completes. If you're replacing your main residence (and it sounds like you are) then you can reclaim the additional amount paid afterwards.

housebuyer143

I am doing this exact thing due to broken chain and I have to pay for 4% extra stamp duty for what will be 3 week period of owning 2 house. Then claim it back. 

Slithery

user1977 said:

If we're talking only a few days then your solicitor might be prepared to take a view on it (if contracts are exchanged for your sale) and just delay submitting your return until after the sale completes.

Only possible if you don't need a mortgage.

Tinangel

housebuyer143 said:

I am doing this exact thing due to broken chain and I have to pay for 4% extra stamp duty for what will be 3 week period of owning 2 house. Then claim it back. 

sorry you have to do this - it's annoying because you it's money you can't spend on buying the house! I'd be glad if you could les us know when you recieve the money back and is the whole thing a lot of hassle? thanks

housebuyer143

Tinangel said:

housebuyer143 said:

I am doing this exact thing due to broken chain and I have to pay for 4% extra stamp duty for what will be 3 week period of owning 2 house. Then claim it back. 

sorry you have to do this - it's annoying because you it's money you can't spend on buying the house! I'd be glad if you could les us know when you recieve the money back and is the whole thing a lot of hassle? thanks

I know, its so frustrating - it equates to £25,000 and luckily I was able to borrow from my parents, as I just didn't have the money to be able to buy the house without it.
I am hoping it is straight forward... They say 28 days for the refund, so you can believe I will be on the phone if I do not see it within that timeframe LOL

dimbo61

If you do end up buying before you sell then consider an Offset mortgage.
You still need a good deposit and must pass the lending checks.
However once you sell your old home you can pay the proceeds into the offset account and the 3% stamp duty refund.

housebuyer143

dimbo61 said:

If you do end up buying before you sell then consider an Offset mortgage.
You still need a good deposit and must pass the lending checks.
However once you sell your old home you can pay the proceeds into the offset account and the 3% stamp duty refund.

Or a tracker with no ERCs. That's what I have done and then once house sells can bring the loan right down

grumiofoundation

housebuyer143 said:

I am doing this exact thing due to broken chain and I have to pay for 4% extra stamp duty for what will be 3 week period of owning 2 house. Then claim it back. 

Unless I am missing something you are either not paying stamp duty and are paying LTT (Wales) or LBTT (Scotland) or you are paying 3% not 4%.

(Obviously being pedantic but rules are different in different countries).

user1977

grumiofoundation said:

housebuyer143 said:

I am doing this exact thing due to broken chain and I have to pay for 4% extra stamp duty for what will be 3 week period of owning 2 house. Then claim it back. 

Unless I am missing something you are either not paying stamp duty and are paying LTT (Wales) or LBTT (Scotland) or you are paying 3% not 4%.

(Obviously being pedantic but rules are different in different countries).

If we want to be pedantic, nobody anywhere in the UK has paid "stamp duty" since 2003 when it was replaced with Stamp Duty Land Tax.