Confusion over stamp duty with second property

nb_berenice

Hi,

I am currently selling my main residence and purchase a new property to be used as a main residence. In parallel I am also selling my disceased late mother's home (currently empty) in which I hold 25% of ownership.

The stamp duty is liable to an additional 3% surcharge on additional properties. If my late mother's home does not sell prior to completing on the new purchased:
- Based on the fact I own 25% of an additional property, how does that impact my stamp duty bill on the new purchase?
- I understand a claim back can be made within 3 years if the second property is sold. Is that pro-rata at all, so if I did not sell for 2 of the 3 years then what I can claim back of the increased stamp duty is reduced?

Thanks for helping me understand.

Gavin

ellie99

AIUI you won't have any stamp duty to pay. Selling your main residence to buy a new main residence does not incur stamp duty, regardless of you having extra property you don't live in.

The only tax you may have to consider is Capital Gains Tax on the inherited property if the value has risen between probate value and the selling price.

loubel

Agreed, if you are selling your main residence and buying another main residence on the same day then the additional property rates do not apply to your SDLT calculation. 

propertyrental

CGT potential on your 25%, assuming the value has increased enough to incur CGT.

No additional SDLT.

Bigphil1474

OP, when you say you own 25% of your late mothers house, do you mean you own it now, or you will receive 25% of the value in the will? If the latter, you won't pay any tax on it as that will be sorted via probate if there's anything to pay. If the former, then as above there may be some tax to pay on capital gains.

propertyrental

Bigphil1474 said:

OP, when you say you own 25% of your late mothers house, do you mean you own it now, or you will receive 25% of the value in the will? If the latter, you won't pay any tax on it as that will be sorted via probate if there's anything to pay. If the former, then as above there may be some tax to pay on capital gains.

Good question. The post is unclear.

SDLT_Geek

nb_berenice said:

Hi,

I am currently selling my main residence and purchase a new property to be used as a main residence. In parallel I am also selling my disceased late mother's home (currently empty) in which I hold 25% of ownership.

The stamp duty is liable to an additional 3% surcharge on additional properties. If my late mother's home does not sell prior to completing on the new purchased:
- Based on the fact I own 25% of an additional property, how does that impact my stamp duty bill on the new purchase?
- I understand a claim back can be made within 3 years if the second property is sold. Is that pro-rata at all, so if I did not sell for 2 of the 3 years then what I can claim back of the increased stamp duty is reduced?

Thanks for helping me understand.

Gavin

SDLT will be due on the purchase if it is for more than £250,000, but the extra 3% for additional properties will not apply so long as you meet all of the condtitions for the "replacement exception".  They can be found here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800 

All of this assumes you are buying in England or Northern Ireland.

nb_berenice

propertyrental said:

CGT potential on your 25%, assuming the value has increased enough to incur CGT.

No additional SDLT.

This was my understanding; just liable to CGT on the sale and value has actually decreased since probate valuation.propertyrental said:

Bigphil1474 said:

OP, when you say you own 25% of your late mothers house, do you mean you own it now, or you will receive 25% of the value in the will? If the latter, you won't pay any tax on it as that will be sorted via probate if there's anything to pay. If the former, then as above there may be some tax to pay on capital gains.

Good question. The post is unclear.

Yes sorry, written in haste and re-read today and didn't even make sense to me!

Think I'll put a call into HMRC and go through it with them. Forums are saying that additional SDLT rates are not a factor in this scenario, but conveyancing solicitors are telling me it does.

user1977

nb_berenice said:

propertyrental said:

CGT potential on your 25%, assuming the value has increased enough to incur CGT.

No additional SDLT.

This was my understanding; just liable to CGT on the sale and value has actually decreased since probate valuation.propertyrental said:

Bigphil1474 said:

OP, when you say you own 25% of your late mothers house, do you mean you own it now, or you will receive 25% of the value in the will? If the latter, you won't pay any tax on it as that will be sorted via probate if there's anything to pay. If the former, then as above there may be some tax to pay on capital gains.

Good question. The post is unclear.

Yes sorry, written in haste and re-read today and didn't even make sense to me!

Think I'll put a call into HMRC and go through it with them. Forums are saying that additional SDLT rates are not a factor in this scenario, but conveyancing solicitors are telling me it does.

Then the solicitors are wrong. You qualify for the “replacing main residence” exemption no matter what else you own.

housebuyer143

Solicitor is wrong. It's an additional property tax, you are not acquiring an additional property. You have two, and you will still have two. Replacing main residence and selling old main residence at the same time means it's not payable.

saajan_12

nb_berenice said:

propertyrental said:

CGT potential on your 25%, assuming the value has increased enough to incur CGT.

No additional SDLT.

This was my understanding; just liable to CGT on the sale and value has actually decreased since probate valuation.propertyrental said:

Bigphil1474 said:

OP, when you say you own 25% of your late mothers house, do you mean you own it now, or you will receive 25% of the value in the will? If the latter, you won't pay any tax on it as that will be sorted via probate if there's anything to pay. If the former, then as above there may be some tax to pay on capital gains.

Good question. The post is unclear.

Yes sorry, written in haste and re-read today and didn't even make sense to me!

Think I'll put a call into HMRC and go through it with them. Forums are saying that additional SDLT rates are not a factor in this scenario, but conveyancing solicitors are telling me it does.

Ask your solicitor why they think the replacing main residence exemption would not apply. 

[I get its hard to go on the word of people on the internet when faced with contradicting professional advice, and even harder to convince the solicitor to not ask for the SDLT, so the above question should help progress the answer without introducing yet another source (HMRC)]