Stamp duty query

Paperhouse

My friend already owns a property in Bulgaria with a value of less than £40k.  He intends to keep this property and buy a UK property to the value of £275k.  In the spirit of the law I would assume that the property in Bulgaria would not be taken into account when calculating stamp duty on the UK house (because its’ value is less than £40k).  The resultant stamp duty on the UK property would therefore be £1250.  Is this correct?

I ask because online stamp duty calculators all assume that the existing property is valued more than £40k.

allconnected

The property in Bulgaria won’t count for working out if he needs to pay the multiple dwellings surcharge, he won’t be treated as owning 2 or more residential properties (as long as he can evidence the sub-£40k value)

However it will count for the purpose of claiming first time buyers relief as any prior interest in residential property at all prevents the buyer from qualifying for this - there’s de-minimis limit for FTB relief.

SDLT_Geek

Paperhouse said:

My friend already owns a property in Bulgaria with a value of less than £40k.  He intends to keep this property and buy a UK property to the value of £275k.  In the spirit of the law I would assume that the property in Bulgaria would not be taken into account when calculating stamp duty on the UK house (because its’ value is less than £40k).  The resultant stamp duty on the UK property would therefore be £1250.  Is this correct?

I ask because online stamp duty calculators all assume that the existing property is valued more than £40k.

Yes, stamp duty land tax at the standard rates on £275,000 is £1,250.  That sounds right, I would not expect the 3% extra SDLT for additional properties to apply where the other property is now worth under £40,000.

Your friend counts as UK resident for SDLT purposes?  There is a 2% surcharge for non UK resident buyers.  If he has been in the UK for over 6 months by the time of the completion of the purchase, he should escape the extra 3%.