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Stamp duty and bridging loans
jrca73
Posts: 1 Newbie
Hello, hoping someone can help on this:
If you buy and move to a new main home with a bridging loan before you sell your current main home, does the transaction in fact count as a second home purchase and incur the higher second-home stamp duty rate as as result?
Context: elderly mother is downsizing from a house to flat. Flat needs renovations and modifications before she can move in. So the plan is to purchase on a bridging loan to buy the new property, secured against her current property (her current property is worth several time more than the new property) do the renovation work, move her in and then put her current home up for sale, empty. She owns no other properties. But she will, in effect, own two properties for a period - likely 3-6 months or so. Hence my question. Thank you.
If you buy and move to a new main home with a bridging loan before you sell your current main home, does the transaction in fact count as a second home purchase and incur the higher second-home stamp duty rate as as result?
Context: elderly mother is downsizing from a house to flat. Flat needs renovations and modifications before she can move in. So the plan is to purchase on a bridging loan to buy the new property, secured against her current property (her current property is worth several time more than the new property) do the renovation work, move her in and then put her current home up for sale, empty. She owns no other properties. But she will, in effect, own two properties for a period - likely 3-6 months or so. Hence my question. Thank you.
0
Comments
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How you finance the purchase is irrelevant, so ignore the fact it's a bridging loan.
The answer is yes, if you buy an additional property then the additional rate of SDLT (or LBTT/LTT) is payable on the purchase, but you can reclaim it provided you complete the sale of the existing property within 3 years.2
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