Stamp Duty

MariaDL

Hi
Hoping for some clarity on stamp duty. 

I am currently renting with my partner and looking to buy our first home together. My partner had a house in the UK which he sold around 9 years ago. I currently have a house outside of the UK, we have never lived in that house as we live permanently in the UK, this house abroad is jus a holiday house. 

Would we have to pay stamp duty as second home because of the house abroad? I have checked with some conveyancing solicitors and I am getting very different responses. 

Thank you, any help would be appreciated. 

SDLT_Geek

MariaDL said:

Hi
Hoping for some clarity on stamp duty. 

I am currently renting with my partner and looking to buy our first home together. My partner had a house in the UK which he sold around 9 years ago. I currently have a house outside of the UK, we have never lived in that house as we live permanently in the UK, this house abroad is jus a holiday house. 

Would we have to pay stamp duty as second home because of the house abroad? I have checked with some conveyancing solicitors and I am getting very different responses. 

Thank you, any help would be appreciated. 

Are you buying in England, so that the relevant stamp duty is stamp duty land tax (SDLT)?

Is the property abroad worth less than £40,000 at today's values?

MariaDL

Hi

thanks for replying 

Yes we are buying in England and yes the property abroad is more than £40k 

SDLT_Geek

MariaDL said:

Hi

thanks for replying 

Yes we are buying in England and yes the property abroad is more than £40k 

In that case, you need to budget for the extra SDLT.  It is presently a 3% surcharge, though that could increase in the Budget on 15 March (it is 6% in Scotland and about 4% in Wales).

I am assuming there is not another property you have sold which you lived in within the last three years.  Is that right?

MariaDL

Oh no, that extra 3% is what I was fearing. No other property sold, we have been renting from the last 7 years as we don’t own any other UK property. 

Thanks for your advice 

MariaDL

SDLT_Geek said:

MariaDL said:

Hi

thanks for replying 

Yes we are buying in England and yes the property abroad is more than £40k 

In that case, you need to budget for the extra SDLT.  It is presently a 3% surcharge, though that could increase in the Budget on 15 March (it is 6% in Scotland and about 4% in Wales).

I am assuming there is not another property you have sold which you lived in within the last three years.  Is that right?

Would it change anything if a transfer the property abroad to a limited company? 

SDLT_Geek

MariaDL said:

SDLT_Geek said:

MariaDL said:

Hi

thanks for replying 

Yes we are buying in England and yes the property abroad is more than £40k 

In that case, you need to budget for the extra SDLT.  It is presently a 3% surcharge, though that could increase in the Budget on 15 March (it is 6% in Scotland and about 4% in Wales).

I am assuming there is not another property you have sold which you lived in within the last three years.  Is that right?

Would it change anything if a transfer the property abroad to a limited company? 

Yes, if a limited company owns a property, the shareholders are not treated as owning  property under the SDLT 3% surcharge rules. 

If using a form of company incorporated abroad, then care should be taken to choose a structure which is treated as "opaque" for UK tax purposes, not as "transparent".

MariaDL

SDLT_Geek said:

MariaDL said:

SDLT_Geek said:

MariaDL said:

Hi

thanks for replying 

Yes we are buying in England and yes the property abroad is more than £40k 

In that case, you need to budget for the extra SDLT.  It is presently a 3% surcharge, though that could increase in the Budget on 15 March (it is 6% in Scotland and about 4% in Wales).

I am assuming there is not another property you have sold which you lived in within the last three years.  Is that right?

Would it change anything if a transfer the property abroad to a limited company? 

Yes, if a limited company owns a property, the shareholders are not treated as owning  property under the SDLT 3% surcharge rules. 

If using a form of company incorporated abroad, then care should be taken to choose a structure which is treated as "opaque" for UK tax purposes, not as "transparent".

Thank you SDLT Geek. 

Can I ask one more question please? Do thefact that the house abroad is not a main residence and we don’t live there count in any way for StDL? I keep thinking is really unfair I need to pay the extra 3% when the house I am buying is my first UK home where I will reside to be able to do my work. 

SDLT_Geek

MariaDL said:

SDLT_Geek said:

Yes, if a limited company owns a property, the shareholders are not treated as owning  property under the SDLT 3% surcharge rules. 

If using a form of company incorporated abroad, then care should be taken to choose a structure which is treated as "opaque" for UK tax purposes, not as "transparent".

Thank you SDLT Geek. 

Can I ask one more question please? Do thefact that the house abroad is not a main residence and we don’t live there count in any way for StDL? I keep thinking is really unfair I need to pay the extra 3% when the house I am buying is my first UK home where I will reside to be able to do my work. 

The fact that you have not lived in the "old property", if anything, makes it worse for you.  It is ownership of a "dwelling" which counts against you when looking at the SDLT on the purchase of a "new property".  (The rules are not limited to ownership of a property which you used to live in as your only or main residence).

It can sometimes be better for the taxpayer to have lived in the old property as an only or main residence.  If that old property is later sold (within 3 years after buying the new property) then the surcharge paid on the new property can sometimes be recoverable.  (Though the residence in the old property needs to have been within the 3 years leading up to the purchase of the new property.) 

Because you have not lived in the old property, selling or otherwise disposing of it after you buy your new home, will not entitle you to a refund of the 3% surcharge.