Stamp Duty question

[iD]

Hi again!

I am currently in the process of buying the house and my solicitors have crunched up the numbers and decided I don't have to pay 3% surcharge (not complaining).

I'm just not sure about that though. I currently own a BTL and live the family myself. No other interest in any properties.

Although at the end of the transaction I'd own two properties, my solicitors have taken the view that I'd only own one primary home at the end. This new house will be replacing my current residence. 

I was under the impression that the "replacing" in the law meant I'd be selling my current house (which for better or worse) I can't since I down own it). And if I am not selling my "current home", the exception does not apply to me and I have to pay the 3% surcharge.

Can anyone confirm if I've got the wrong end of the stick here?

I would love you to tell me I'm wrong since this will push the Stamp duty to 13k more than what my solicitors have told me.

Thanks in advance.

user1977

Unfortunately your solicitors are mistaken, "replacing" does mean selling and buying, not merely moving house (otherwise it would be a wide-open loophole). Up to you whether to gently explain this to your solicitor or run the risk of tax evasion...

_Penny_Dreadful

[iD] said:

Hi again!

I am currently in the process of buying the house and my solicitors have crunched up the numbers and decided I don't have to pay 3% surcharge (not complaining).

I'm just not sure about that though. I currently own a BTL and live the family myself. No other interest in any properties.

Although at the end of the transaction I'd own two properties, my solicitors have taken the view that I'd only own one primary home at the end. This new house will be replacing my current residence. 

I was under the impression that the "replacing" in the law meant I'd be selling my current house (which for better or worse) I can't since I down own it). And if I am not selling my "current home", the exception does not apply to me and I have to pay the 3% surcharge.

Can anyone confirm if I've got the wrong end of the stick here?

I would love you to tell me I'm wrong since this will push the Stamp duty to 13k more than what my solicitors have told me.

Thanks in advance.

Your solicitor is wrong. You do not meet the criteria for replacing your main residence and if the BTL you own is worth £40k+ the higher rate of SDLT will apply to the transaction. 

The higher rate of SDLT was introduced 1st April 2016 and it’s amazing how some solicitors still get it dead wrong, even in a cut and dry case like this. 

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812

SDLT_Geek

I agree with the replies given. 

The BTL is owned by you personally is it?  Not by a limited company in which you hold the shares?  There is no "look through" for these purposes to a company you control.

Sometimes it can be possible to transfer a property in advance to a limited company, but that is not straightforward with many factors to consider such as:

• Borrowing arrangements
• Capital gains tax
• The company having to pay SDLT based on the market value and with the 3% extra applying to that.

MultiFuelBurner

You could just factor in the 3% put it away in a high interest savings account and pay if and when asked.

That's entirely a "you" decision.

km1500

the interest you gain may be less than the penalty imposed ny HMRC

user1977

km1500 said:

the interest you gain may be less than the penalty imposed ny HMRC

Indeed. And hedging against your tax evasion probably isn't within the realms of acceptable "money-saving" advice here! 

SDLT_Geek

MultiFuelBurner said:

You could just factor in the 3% put it away in a high interest savings account and pay if and when asked.

That's entirely a "you" decision.

No.  Do NOT do that!!!

[iD]

Thanks folks. I feared that’d be the case. 

Don’t think keeping it in savings etc is worth the risk. Will pay what’s due and move on. 

£13K of saving would have been nice though 😞

SDLT_Geek

[iD] said:

Thanks folks. I feared that’d be the case. 

Don’t think keeping it in savings etc is worth the risk. Will pay what’s due and move on. 

£13K of saving would have been nice though 😞

It is good that you are honest!