Stamp Duty Query

Clarkg85

Having some conflicting opinions on Stamp Duty for my upcoming purchase and would appreciate some help from you knowledgeable lot!!

We are purchasing our first home together at a price of £625k so understand that will incur a stamp duty fee of £18,750.

Where we are confused is the additional 3% rate for second homes. I am selling my primary residence and this will be before we complete on the above purchase so that's fine, but my partner has a BTL that was previously her primary residence before she rented it out 3 years ago when she moved into my house.

We are keeping this BTL so will the 3% be on the BTL  (valued around £180k) so £5400 or will the £3% be on the new 625k house even though that will be our primary residence incurring a fee of £18,750 in addition to the other £18750 meaning total would be £37,500?

Any help would be much appreciated as the difference between £5400 and £17,750 is significant.

_Penny_Dreadful

Clarkg85 said:

Having some conflicting opinions on Stamp Duty for my upcoming purchase and would appreciate some help from you knowledgeable lot!!

We are purchasing our first home together at a price of £625k so understand that will incur a stamp duty fee of £18,750.

Where we are confused is the additional 3% rate for second homes. I am selling my primary residence and this will be before we complete on the above purchase so that's fine, but my partner has a BTL that was previously her primary residence before she rented it out 3 years ago when she moved into my house.

We are keeping this BTL so will the 3% be on the BTL  (valued around £180k) so £5400 or will the £3% be on the new 625k house even though that will be our primary residence incurring a fee of £18,750 in addition to the other £18750 meaning total would be £37,500?

Any help would be much appreciated as the difference between £5400 and £17,750 is significant.

SDLT is payable when you buy a new property. The BTL is already owned so the SDLT, including the higher rate, is payable on the consideration being paid for the new residence which is £625k. This is because your partner is purchasing an additional residential property. The fact it will be your main residence is irrelevant. 

However, if your partner is actually your spouse or your civil partner then the higher rate would not apply to the purchase because as a married couple/civil partnership you would meet the definition of replacing your main residence. Shall I buy a hat? 

Clarkg85

_Penny_Dreadful said:

Clarkg85 said:

Having some conflicting opinions on Stamp Duty for my upcoming purchase and would appreciate some help from you knowledgeable lot!!

We are purchasing our first home together at a price of £625k so understand that will incur a stamp duty fee of £18,750.

Where we are confused is the additional 3% rate for second homes. I am selling my primary residence and this will be before we complete on the above purchase so that's fine, but my partner has a BTL that was previously her primary residence before she rented it out 3 years ago when she moved into my house.

We are keeping this BTL so will the 3% be on the BTL  (valued around £180k) so £5400 or will the £3% be on the new 625k house even though that will be our primary residence incurring a fee of £18,750 in addition to the other £18750 meaning total would be £37,500?

Any help would be much appreciated as the difference between £5400 and £17,750 is significant.

SDLT is payable when you buy a new property. The BTL is already owned so the SDLT, including the higher rate, is payable on the consideration being paid for the new residence which is £625k. This is because your partner is purchasing an additional residential property. The fact it will be your main residence is irrelevant. 

However, if your partner is actually your spouse or your civil partner then the higher rate would not apply to the purchase because as a married couple/civil partnership you would meet the definition of replacing your main residence. Shall I buy a hat? 

Thanks for the quick response and your last point is interesting.... So if we were married there would be no 3% at all saving us £17,750? The reason I ask is because we aren't married, but are getting married and a date has been set, but likely will fall after the completion date? Is there any leeway on this or would we need to be legally married before the completion date?

_Penny_Dreadful

You would need to be married or in a civil partnership before completion. 

Clarkg85

_Penny_Dreadful said:

You would need to be married or in a civil partnership before completion. 

Thanks again Penny,

My future wife is going to love this conversation later... I can imagine it going something like this...

You know we are getting married, but can we do a secret ceremony before we complete on our house at a register offer so that we can save £18,750 and then pretend at the main ceremony we have planned in a few months time that we aren't to all our friends and family...

Another spanner, do you know if we would need to be married before my house sale goes through? This will likely happen in the next few week and then we will be living with family until our new family home completes towards the end of the year?

_Penny_Dreadful

I think you should be ok if the sale of your current home completes before you get married/enter into a civil partnership. @SDLT_Geek is the resident SDLT expert on the forum so hopefully they could confirm that my bum’s not oot the windae on this one. 

SDLT_Geek

I agree with most of the comments above, the 3% extra if due would be payable on the price of the property being bought.  The 3% can be escaped if a spouse has lived in your property (which you are selling) as their only or main residence. 

But the legislation is clear, for this escape to work, the other person (the partner with the let property) must have been a spouse or civil partner at the date of the completion of the sale of the existing home.