2nd property stamp duty question

Early_Retire_Free

Slightly complication question on 2nd home stamp duty.

In February 2018 we purchased a UK house when we owned an overseas property so had to pay the 3% stamp duty surcharge.

18 months later in July 2019 we sold the UK home and exchanged contracts on another UK home i.e. effectively flipped our main residence from the original property to the new property.

For various reasons we were unable to complete the purchase of the new property for a further 18 months (i.e. November 2020).  In the interim we shared a uk home with relatives.

In July 2022 we sold the overseas property so now only own one property.

My question is as follows:

1. Because we had exchanged (but not completed) on the property in July 2019 did we actually only 'own' one property at that time (and therefore should have been able to reclaim the 3% surcharge).

2. When we completed on the property in November 2020 we again owned 2 properties BUT triggered a new 3-year period for reclaiming the surcharge (which we would have been eligable for in July 2022) when we sold the overseas property.

Is my thinking right here?

housebuyer143

Did you pay any extra surcharge when you bought the new house? 
If not I don't think there is anything to claim back.

House 2 could have been claimed back if you sold house 1 within 3 years, but as you sold the overseas property 4 years later this does not apply. 

If you paid 3% extra on house 3 then you can claim it back when you sold house 2 but it doesn't seem this is the case as you sold before you bought. 

You must be replacing your main residence to claim it back. 

I could be wrong but that's my take on it. 

SDLT_Geek

Early_Retire_Free said:

Slightly complication question on 2nd home stamp duty.

In February 2018 we purchased a UK house when we owned an overseas property so had to pay the 3% stamp duty surcharge.

18 months later in July 2019 we sold the UK home and exchanged contracts on another UK home i.e. effectively flipped our main residence from the original property to the new property.

For various reasons we were unable to complete the purchase of the new property for a further 18 months (i.e. November 2020).  In the interim we shared a uk home with relatives.

In July 2022 we sold the overseas property so now only own one property.

My question is as follows:

1. Because we had exchanged (but not completed) on the property in July 2019 did we actually only 'own' one property at that time (and therefore should have been able to reclaim the 3% surcharge).

2. When we completed on the property in November 2020 we again owned 2 properties BUT triggered a new 3-year period for reclaiming the surcharge (which we would have been eligable for in July 2022) when we sold the overseas property.

Is my thinking right here?

Let me check the facts first.  Can you please confirm / add details.

Property 1.  Overseas property.  You owned it since before 2018.  You completed the sale of it in July 2022.
Did you ever live in it as your only or main residence?  Up to when?  Some time before 2018?

Property 2.  Property is in England?  You completed the purchase in February 2018 and paid the extra 3% SDLT.  You lived in it as your only home from Feb 2018 until July 2019 when you completed its sale.

Property 3.  Property is in England?  You exchanged contracts to buy it in July 2019 but did not complete the purchase until November 2020.  Then you moved into it and live in it as your only home.  You did not have to pay the 3% surcharge on the purchase on the basis that it was a "replacement" for Property 2 which you had already sold?

Your questions are about the 3% surcharge you paid on Property 2?

Early_Retire_Free

SDLT_Geek said:

Early_Retire_Free said:

Slightly complication question on 2nd home stamp duty.

In February 2018 we purchased a UK house when we owned an overseas property so had to pay the 3% stamp duty surcharge.

18 months later in July 2019 we sold the UK home and exchanged contracts on another UK home i.e. effectively flipped our main residence from the original property to the new property.

For various reasons we were unable to complete the purchase of the new property for a further 18 months (i.e. November 2020).  In the interim we shared a uk home with relatives.

In July 2022 we sold the overseas property so now only own one property.

My question is as follows:

1. Because we had exchanged (but not completed) on the property in July 2019 did we actually only 'own' one property at that time (and therefore should have been able to reclaim the 3% surcharge).

2. When we completed on the property in November 2020 we again owned 2 properties BUT triggered a new 3-year period for reclaiming the surcharge (which we would have been eligable for in July 2022) when we sold the overseas property.

Is my thinking right here?

Let me check the facts first.  Can you please confirm / add details.

Property 1.  Overseas property.  You owned it since before 2018.  You completed the sale of it in July 2022.
Did you ever live in it as your only or main residence?  Up to when?  Some time before 2018? Yes, we bought the overseas property in 2014 and lived in it as our permanent residence between 2016 and when we relocated back to the uk in 2018.

Property 2.  Property is in England?  You completed the purchase in February 2018 and paid the extra 3% SDLT.  You lived in it as your only home from Feb 2018 until July 2019 when you completed its sale.  Yes, we lived in that as our main residence (but kept the overseas property as a holiday home)

Property 3.  Property is in England?  Yes, the property was in England.

You exchanged contracts to buy it in July 2019 but did not complete the purchase until November 2020.  Then you moved into it and live in it as your only home.  You did not have to pay the 3% surcharge on the purchase on the basis that it was a "replacement" for Property 2 which you had already sold?  All correct

Your questions are about the 3% surcharge you paid on Property 2?  Correct

See my responses above in bold

SDLT_Geek

Thank you for the clarifications.  The 3% surcharge you paid on Property 2 is not recoverable.

(a)  The sale of Property 2 could not entitle you to recover the 3% paid on Property 2.  The rules do not work to allow that.

(b)  The sale of Property 1 was over four years after the purchase of Property 2, and so well outside of the three year period required to allow you to reclaim the extra 3% paid on Property 2.  There are provisions for extensions to the 3 year rule in exceptional circumstances, but it seems unlikely that this would apply as you kept Property 1 as a holiday home.

Early_Retire_Free

SDLT_Geek said:

(a)  The sale of Property 2 could not entitle you to recover the 3% paid on Property 2.  The rules do not work to allow that.

Can I ask whether you can clarify that last piece?

When we sold property 2, we only had one main residence as, while we had exchanged on property 3, we had not completed (and the SDLT) liability only arises on completion i.e. we could have reverted our main residence to the overseas property.

SDLT_Geek

Early_Retire_Free said:

SDLT_Geek said:

(a)  The sale of Property 2 could not entitle you to recover the 3% paid on Property 2.  The rules do not work to allow that.

Can I ask whether you can clarify that last piece?

When we sold property 2, we only had one main residence as, while we had exchanged on property 3, we had not completed (and the SDLT) liability only arises on completion i.e. we could have reverted our main residence to the overseas property.

The right to a refund of SDLT only arises if the legislation makes provision for a refund.  There are provisions for a refund on the extra 3% paid on Property 2 in some circumstances where Property 1 is later sold.  There are no provisions allowing for a refund on the extra 3% paid on Property 2 by virtue of Property 2 being sold.

The rules about refunds of the extra 3% are summarised in HMRC guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800 

Early_Retire_Free

Just an update - after a little tooing and froing we managed to get our money back under the exceptional cirsumstances provisions!

Worthwhile persisting!

SDLT_Geek

Early_Retire_Free said:

Just an update - after a little tooing and froing we managed to get our money back under the exceptional cirsumstances provisions!

Worthwhile persisting!

Great news!  Thanks for the update!