Stamp Duty on re-mortgaged 2nd house?

Snookie12cat

Here is the calculation.

warwick2001

SDLT_Geek said:

warwick2001 said:

SDLT_Geek said:

warwick2001 said:

SDLT_Geek said:

warwick2001 said:

Afternoon all,

Just got a question for you knowledgeable folk.

We are in the process of buying a house for us to live in (£182k mortgage). House A

Our current house is being remortgaged with a BTL mortgage (£85k BLT mortgage). House B

We have just received our completion certificate from our solicitor, and there appears to be only 1 stamp duty payment, and it appears to be attached to House A.

I have read that "Stamp Duty Land Tax is not payable unless there is a need to transfer the legal title of your home as part of the remortgage transaction". And technically this is the case, we are not changing the legal title. However, I am positive I should be paying 2 lots of stamp duty on the purchase/re-mortgage as we will have 2 houses, House A is our home, House B will be rented out.

Can anyone advise please.

Many thanks

I would expect you to pay SDLT only on the property you are buying, House A, but with the extra 3% for additional properties.  If you say what the price is, I could work out the SDLT to see if it matches what your solicitor says.

I would not expect you to have to pay SDLT on the remortgage of House B, unless its underlying ownership is also changing.

We are paying £228k for House A

The SDLT on House A with the extra 3% on a price of £228K comes to £8,900.  Is that what the solicitor said?

The solicitor has quoted £2,060 for the Stamp Duty. Please could you show how you got to £8,900, thanks

£2,060 is the correct amount on £228K without the 3% extra.  3% of £228K is another £6,840.  Adding that to £2,060 gives £8,900 which is the amount of SDLT you should pay.

And just to double/triple check before I call my solicitor an idiot, the additional 3% is still applicable even tho its a BTL mortgage on the 2nd property?  

SDLT_Geek

warwick2001 said:

SDLT_Geek said:

warwick2001 said:

SDLT_Geek said:

warwick2001 said:

SDLT_Geek said:

warwick2001 said:

Afternoon all,

Just got a question for you knowledgeable folk.

We are in the process of buying a house for us to live in (£182k mortgage). House A

Our current house is being remortgaged with a BTL mortgage (£85k BLT mortgage). House B

We have just received our completion certificate from our solicitor, and there appears to be only 1 stamp duty payment, and it appears to be attached to House A.

I have read that "Stamp Duty Land Tax is not payable unless there is a need to transfer the legal title of your home as part of the remortgage transaction". And technically this is the case, we are not changing the legal title. However, I am positive I should be paying 2 lots of stamp duty on the purchase/re-mortgage as we will have 2 houses, House A is our home, House B will be rented out.

Can anyone advise please.

Many thanks

I would expect you to pay SDLT only on the property you are buying, House A, but with the extra 3% for additional properties.  If you say what the price is, I could work out the SDLT to see if it matches what your solicitor says.

I would not expect you to have to pay SDLT on the remortgage of House B, unless its underlying ownership is also changing.

We are paying £228k for House A

The SDLT on House A with the extra 3% on a price of £228K comes to £8,900.  Is that what the solicitor said?

The solicitor has quoted £2,060 for the Stamp Duty. Please could you show how you got to £8,900, thanks

£2,060 is the correct amount on £228K without the 3% extra.  3% of £228K is another £6,840.  Adding that to £2,060 gives £8,900 which is the amount of SDLT you should pay.

And just to double/triple check before I call my solicitor an idiot, the additional 3% is still applicable even tho its a BTL mortgage on the 2nd property?  

The extra 3% is due because you will own two properties when you buy House A.  You do not qualify as "replacing" your residence as you are keeping House B, not selling it.

You can refer your solicitor to the guidance on it starting from this contents page: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

SuseOrm

 If you are swapping your main residence for your main residence my understanding is you do not need to pay the 3% stamp duty ? 

SuseOrm

Just to clarify my understanding is you would’ve already paid the 3% on the cheaper house as it’s a buy to let 

Slithery

SuseOrm said:

 If you are swapping your main residence for your main residence my understanding is you do not need to pay the 3% stamp duty ? 

Your understanding is incorrect. 'Replacing' in SDLT terms means selling the previous main residence.
The extra SDLT due is for 'additional properties'. The OP will own one property before the transaction and two afterwards hence the additional 3% SDLT.

SuseOrm

Well if it was me I would somehow orchestrate it so that you pay the 3% stamp duty on the cheaper house first and then go ahead with the purchase of house A which therefore is replacing the main residence

Snookie12cat

SuseOrm said:

Just to clarify my understanding is you would’ve already paid the 3% on the cheaper house as it’s a buy to let 

You pay stamp duty if applicable on your first house.. Then when you buy another house, if you do not sell the other house you are changed normal stamp duty plus the additional 3%or4%.

It doesn't matter that is BTL or not. If you have one property and you buy another thus having 2 houses, the additional tax is due.

SuseOrm

Snookie12cat said:

SuseOrm said:

Just to clarify my understanding is you would’ve already paid the 3% on the cheaper house as it’s a buy to let 

You pay stamp duty if applicable on your first house.. Then when you buy another house, if you do not sell the other house you are changed normal stamp duty plus the additional 3%or4%.

It doesn't matter that is BTL or not. If you have one property and you buy another thus having 2 houses, the additional tax is due.

https://www.capextax.com/news/what-is-the-definition-of-main-residence-for-stamp-duty-land-tax

That doesnt seem to always be the case.  

Slithery

SuseOrm said:

Well if it was me I would somehow orchestrate it so that you pay the 3% stamp duty on the cheaper house first and then go ahead with the purchase of house A which therefore is replacing the main residence

Well if that was possible it would be fantastic. But it isn't...

SuseOrm said:
https://www.capextax.com/news/what-is-the-definition-of-main-residence-for-stamp-duty-land-tax

That doesnt seem to always be the case.  

I'm not sure how you're interpreting that website but it confirms what the rest of us are saying...