SDLT 3% Surcharge Reclaim for a Rental Property That Has Never Been My Main Residence

PeteSouthgate72

Hello MSE,

I’m seeking clarification regarding the 3% Stamp Duty Land Tax (SDLT) surcharge on second properties and whether I would be eligible to reclaim it when selling a rental property that has never been my main residence.

Here’s my situation:

• I currently own a rental property that I purchased in 2014. I have never lived in this property; it has been rented out continuously since I purchased it.

• I am planning to buy a new property, which I intend to use as my main residence, and I understand that I will have to pay the higher SDLT rates, including the 3% surcharge, as this will be my second property.

• I am considering selling the rental property within the next 3 years after purchasing the new property.

Given that the rental property has never been my main residence, my question is: Would I still be eligible to reclaim the 3% SDLT surcharge once I sell the rental property, even though I have never lived in it?

I understand that typically, the property you live in at the time of purchasing the second home or intend to make your main residence matters in determining the eligibility for the refund. However, I am unsure how this applies when the first property was always a rental and never a main residence.

Could anyone please confirm whether I would be able to reclaim the 3% surcharge under these circumstances and clarify any specific rules that apply to selling a rental property?

TIA   

SDLT_Geek

PeteSouthgate72 said:

Hello MSE,

I’m seeking clarification regarding the 3% Stamp Duty Land Tax (SDLT) surcharge on second properties and whether I would be eligible to reclaim it when selling a rental property that has never been my main residence.

Here’s my situation:

• I currently own a rental property that I purchased in 2014. I have never lived in this property; it has been rented out continuously since I purchased it.

• I am planning to buy a new property, which I intend to use as my main residence, and I understand that I will have to pay the higher SDLT rates, including the 3% surcharge, as this will be my second property.

• I am considering selling the rental property within the next 3 years after purchasing the new property.

Given that the rental property has never been my main residence, my question is: Would I still be eligible to reclaim the 3% SDLT surcharge once I sell the rental property, even though I have never lived in it?

I understand that typically, the property you live in at the time of purchasing the second home or intend to make your main residence matters in determining the eligibility for the refund. However, I am unsure how this applies when the first property was always a rental and never a main residence.

Could anyone please confirm whether I would be able to reclaim the 3% surcharge under these circumstances and clarify any specific rules that apply to selling a rental property?

TIA   

The rules are clear.  You would not be entitled to a refund in this scenario. 

The guidance at SDLTM09800 is helpful on this: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

saajan_12

A very simple No. There's specifically only a refund if the property being sold was your main residence. 

Why are you unsure?

TheJP

SDLT_Geek said:

PeteSouthgate72 said:

Hello MSE,

I’m seeking clarification regarding the 3% Stamp Duty Land Tax (SDLT) surcharge on second properties and whether I would be eligible to reclaim it when selling a rental property that has never been my main residence.

Here’s my situation:

• I currently own a rental property that I purchased in 2014. I have never lived in this property; it has been rented out continuously since I purchased it.

• I am planning to buy a new property, which I intend to use as my main residence, and I understand that I will have to pay the higher SDLT rates, including the 3% surcharge, as this will be my second property.

• I am considering selling the rental property within the next 3 years after purchasing the new property.

Given that the rental property has never been my main residence, my question is: Would I still be eligible to reclaim the 3% SDLT surcharge once I sell the rental property, even though I have never lived in it?

I understand that typically, the property you live in at the time of purchasing the second home or intend to make your main residence matters in determining the eligibility for the refund. However, I am unsure how this applies when the first property was always a rental and never a main residence.

Could anyone please confirm whether I would be able to reclaim the 3% surcharge under these circumstances and clarify any specific rules that apply to selling a rental property?

TIA   

The rules are clear.  You would not be entitled to a refund in this scenario. 

The guidance at SDLTM09800 is helpful on this: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

The SDLT god has spoken....

[Deleted User]

PeteSouthgate72 said:

Hello MSE,

I’m seeking clarification regarding the 3% Stamp Duty Land Tax (SDLT) surcharge on second properties and whether I would be eligible to reclaim it when selling a rental property that has never been my main residence.

Here’s my situation:

• I currently own a rental property that I purchased in 2014. I have never lived in this property; it has been rented out continuously since I purchased it.

• I am planning to buy a new property, which I intend to use as my main residence, and I understand that I will have to pay the higher SDLT rates, including the 3% surcharge, as this will be my second property.

• I am considering selling the rental property within the next 3 years after purchasing the new property.

Given that the rental property has never been my main residence, my question is: Would I still be eligible to reclaim the 3% SDLT surcharge once I sell the rental property, even though I have never lived in it?

I understand that typically, the property you live in at the time of purchasing the second home or intend to make your main residence matters in determining the eligibility for the refund. However, I am unsure how this applies when the first property was always a rental and never a main residence.

Could anyone please confirm whether I would be able to reclaim the 3% surcharge under these circumstances and clarify any specific rules that apply to selling a rental property?

TIA   

I found myself in this position. I had to pay 2nd home stamp duty when purchasing my own residential property. I benefitted from the stamp duty holiday on the regular portion of the duty.

In view of likely changes to capital gains tax, selling the let property this year might have been a good thing, also removing the question of second home stamp duty for yourself.