Stamp Duty. The actual scenario.

DesWalker

Hi All,

My previous post talked in hypotheticals. It got some very helpful response particularly around the notion of replacing one’s main residence, but the replies have not quite addressed my specific circumstances. So here they are....

I have rented on the outskirts of Manchester for more than 20 years. I am fully resident here at this address. Council taxes, car insurance, voting register, bank accounts, the lot. There can be no question about this.

Ten years ago I bought a small apartment in Spain. I have used it for extended holidays, perhaps totalling 90 days per year. I have never claimed or sought any form of residence in Spain and indeed it is questionable about whether I would even qualify. I travel back and forth like a tourist when my job allows.

I now wish to buy a flat close to where I currently live to use as my main residence as I am sick of paying rent on my current main residence. 

I find it it very hard to believe that someone in my circumstances (moving out of rented and into my own property) is expected to pay the stamp duty surcharge. 

I would very much appreciate any thoughts.

Des

Wonka_2

I went back to look for your previous post for context and you've a previous one to that talking about trying to sell a UK property in 2017 (not 20yrs ago) ??

DesWalker

Thanks Wonka. Please disregard that post. I was actually in the exact same scenario as now back in 2017. Renting, wanting to buy, owning a holiday home abroad but not having the right or even the desire to live there full time, and wanting to know why I am expected to pay the surcharge to move my main residence from rented to owned. It just doesn’t seem fair !!! 

user1977

DesWalker said:

I find it it very hard to believe that someone in my circumstances (moving out of rented and into my own property) is expected to pay the stamp duty surcharge. 

You will need to learn to believe!

You can avoid it by first disposing of your Spanish property.

DesWalker

I am manifestly “replacing” my main residence. Why do those who own rather than rent their former main residence get preferential treatment ? Thanks in advance.

sheramber

Replacing means disposing of your mani residence. As you are not disposing of your main residence you need to pay the higher stamp duty as you are incresing your property owning form one to teo.

That is how the Government drew up the rules.

user1977

DesWalker said:

I am manifestly “replacing” my main residence. Why do those who own rather than rent their former main residence get preferential treatment ? Thanks in advance.

No, replacing means selling and buying.

They get preferential treatment because they're not increasing the number of properties they own, whereas you are.

km1500

is your share of the Spanish property under £40k?

Elliott.T123

DesWalker said:

I am manifestly “replacing” my main residence. Why do those who own rather than rent their former main residence get preferential treatment ? Thanks in advance.

Because they only own one property. You could sell your Spanish property and then you would receive "preferential" treatment too.

I am sure that a huge chunk of those people selling and buying would absolutely love a holiday house in Spain but cant afford it.

SDLT_Geek

DesWalker said:

Hi All,

My previous post talked in hypotheticals. It got some very helpful response particularly around the notion of replacing one’s main residence, but the replies have not quite addressed my specific circumstances. So here they are....

I have rented on the outskirts of Manchester for more than 20 years. I am fully resident here at this address. Council taxes, car insurance, voting register, bank accounts, the lot. There can be no question about this.

Ten years ago I bought a small apartment in Spain. I have used it for extended holidays, perhaps totalling 90 days per year. I have never claimed or sought any form of residence in Spain and indeed it is questionable about whether I would even qualify. I travel back and forth like a tourist when my job allows.

I now wish to buy a flat close to where I currently live to use as my main residence as I am sick of paying rent on my current main residence. 

I find it it very hard to believe that someone in my circumstances (moving out of rented and into my own property) is expected to pay the stamp duty surcharge. 

I would very much appreciate any thoughts.

Des

The extra 3% SDLT will be due if you still own the property in Spain when you complete the purchase of the flat, assuming the property in Spain is worth £40,000 or more.  There is HMRC guidance on the 3% surcharge here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

It sounds highly unlikely to me, but the only possible angle I could think of is if you had signed a lease for over seven years on the rented property and now surrender that lease.  That lease could then count as a "major interest".  In my experience most tenants would sign a short tenancy, for say one year, which might be renewed or allowed to run on.  That is not the same as being granted a lease for over seven years, even if the period of occupation exceeds 7 years.