SDLT on main residence when owning a rental property

richgm

My wife owns our main residence and I own a second home which I rent out. We are currently selling our main residence and purchasing a new one which will again be in my wife's name (Sale and purchase will be completed same day) . We have been advised by our solicitor that we have to pay the higher rate of SDLT but using the government web site calculator and ticking the box to say we own a second property it shows the lower rate. My question is, who's correct? It makes a £16k difference so means we have to raise more funds to complete if it's the higher amount. 

mebu60

If you are married or in a civil partnership the SDLT rules treat it as if you were buying the property together even if you are not. However, you (together) are replacing a sole principal private residence so ask the solicitor exactly why the standard rate does not apply. 

Bookworm105

you are married, so are treated as one "unit"
that unit owns 2 properties, its main home and its BTL

single most important fact: it is selling the main home and "replacing" it with a new main home

Therefore,

• if the sale completes on or before the purchase completion then only standard rate is payable (and that is your exact scenario)
• if the sale completes after the purchase then the higher rate is payable at time of purchase, but the excess can be reclaimed if the sale of ex home completes within 3 years of that new purchase.

I am frankly shocked that there still solicitors who do not know this basic stuff, there are only 4 conditions to be assessed and replacement is Condition D 
SDLTM09800 - SDLT - higher rates for additional dwellings: Condition D - general - Para 3(6) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

tell your solicitor to learn the examples, starting with the first example given, the married couple...
SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

saajan_12

Solicitor is wrong. Who's name each property is under is irrelevant as you're married. As a couple, you own two properties but are replacing your main residence which is being sold. If you sell then buy, then no extra SDLT due on the purchase. If you buy then sell, then HMRC don't know you will sell so the higher SDLT is charged upon purchase, but refunded upon sale. 

Grumpy_chap

This is the second thread this evening where a Solicitor is reported to have advised individuals replacing main residence that higher rate SDLT applies.
Either there is complexity in these cases, such as timelines, or the Solicitors are woeful.

richgm

Thank you for the replies. I was fairly sure I was right but you expect these people to know what they are talking about and it made me I start to doubt myself.