Stamp Duty Main Residence / Additional Property Grey Area?

stu1892

Afternoon!
Just looking for a bit of advice or anybody with a similar experience.
We're looking to upsize now we're a family of 4 when the house was originally purchased by one.

My wife bought our current property (A) for herself in 2017.
I bought a flat (B) in 2008 and lived there until I moved in with her in 2018.
I kept the flat on, renting it out since 2019 (i think).
We've had two kids in that time and got married last year.

We've sold (stc) property A and for the sake of argument, we're looking at a £300k property(C).

We know due to the value we're due to pay SDLT on property C.  Do we need to pay additional property tax?  Property A has always been her main residence, I've been there since 2018, had kids and got married.  
Our main residence is definitely changing and we'll be living in property C.

Can this be disputed due to property A being in her name only?

A mortgage advisor friend of mine said married and kids is pretty solid evidence that i live there, but warned me a Solicitor when completing will probably advise us to pay it and claim back.
I'd much rather not be £17k out of pocket for months and not knowing what is going to happen!

Any help appreciated or a solid source for advice appreciated as i've went round in circles trying to find experts online!

Cheers
Stu

Bookworm105

property A has been the main home of both of you since the marriage and therefore the sale of A and purchase of C is classed as exempt replacement of the main home so potentially standard rate SDLT only

however, if you do not legally complete the sale of A before or on the same day as you legally complete the purchase of C you would have to pay the higher rate on purchase of C and then claim a refund of that extra tax when you do subsequently legally complete the sale of A. The higher rate only applies where there is a "delay" in the sale of A

assuming you have never been made a legal owner of A, then you are actually a very straightforward example given by HMRC. Married couple, own a main and rental, replacing the main - see example 1
  SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

SDLT_Geek

stu1892 said:

Afternoon!
Just looking for a bit of advice or anybody with a similar experience.
We're looking to upsize now we're a family of 4 when the house was originally purchased by one.

My wife bought our current property (A) for herself in 2017.
I bought a flat (B) in 2008 and lived there until I moved in with her in 2018.
I kept the flat on, renting it out since 2019 (i think).
We've had two kids in that time and got married last year.

We've sold (stc) property A and for the sake of argument, we're looking at a £300k property(C).

We know due to the value we're due to pay SDLT on property C.  Do we need to pay additional property tax?  Property A has always been her main residence, I've been there since 2018, had kids and got married.  
Our main residence is definitely changing and we'll be living in property C.

Can this be disputed due to property A being in her name only?

A mortgage advisor friend of mine said married and kids is pretty solid evidence that i live there, but warned me a Solicitor when completing will probably advise us to pay it and claim back.
I'd much rather not be £17k out of pocket for months and not knowing what is going to happen!

Any help appreciated or a solid source for advice appreciated as i've went round in circles trying to find experts online!

Cheers
Stu

From what you say, property A is clearly your only residence, you have lived there with family since 2018.

To escape the 5% surcharge for SDLT, you need to meet all of the conditions for the "replacement" of an only or main home.  They are set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

You should be able to meet condition 2 (about the disposal) on the basis that your spouse is disposing of the property you have been living in.

stu1892

Bookworm105 said:

property A has been the main home of both of you since the marriage and therefore the sale of A and purchase of C is classed as exempt replacement of the main home so potentially standard rate SDLT only

however, if you do not legally complete the sale of A before or on the same day as you legally complete the purchase of C you would have to pay the higher rate on purchase of C and then claim a refund of that extra tax when you do subsequently legally complete the sale of A. The higher rate only applies where there is a "delay" in the sale of A

assuming you have never been made a legal owner of A, then you are actually a very straightforward example given by HMRC. Married couple, own a main and rental, replacing the main - see example 1
  SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

SDLT_Geek said:

stu1892 said:

From what you say, property A is clearly your only residence, you have lived there with family since 2018.

To escape the 5% surcharge for SDLT, you need to meet all of the conditions for the "replacement" of an only or main home.  They are set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

You should be able to meet condition 2 (about the disposal) on the basis that your spouse is disposing of the property you have been living in.

Can I just thank you both for your great replies, it's really put my mind at ease.

I just don't trust the likes of the tax office and insurance companies and feel they'll do everything they can to sting you.

Is there anywhere i can get this confirmed in some kind of official / legal letter even prior to our own conveyancing?

Thanks again.

Stu

user1977

stu1892 said:

Bookworm105 said:

property A has been the main home of both of you since the marriage and therefore the sale of A and purchase of C is classed as exempt replacement of the main home so potentially standard rate SDLT only

however, if you do not legally complete the sale of A before or on the same day as you legally complete the purchase of C you would have to pay the higher rate on purchase of C and then claim a refund of that extra tax when you do subsequently legally complete the sale of A. The higher rate only applies where there is a "delay" in the sale of A

assuming you have never been made a legal owner of A, then you are actually a very straightforward example given by HMRC. Married couple, own a main and rental, replacing the main - see example 1
  SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

SDLT_Geek said:

stu1892 said:

From what you say, property A is clearly your only residence, you have lived there with family since 2018.

To escape the 5% surcharge for SDLT, you need to meet all of the conditions for the "replacement" of an only or main home.  They are set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

You should be able to meet condition 2 (about the disposal) on the basis that your spouse is disposing of the property you have been living in.

Is there anywhere i can get this confirmed in some kind of official / legal letter even prior to our own conveyancing?

You’ve already been given a link to HMRC’s own guidance. You could pay for a solicitor or accountant to give you the same advice if you really wanted, but doesn’t seem money-saving to me.

SDLT_Geek

stu1892 said:

Bookworm105 said:

property A has been the main home of both of you since the marriage and therefore the sale of A and purchase of C is classed as exempt replacement of the main home so potentially standard rate SDLT only

however, if you do not legally complete the sale of A before or on the same day as you legally complete the purchase of C you would have to pay the higher rate on purchase of C and then claim a refund of that extra tax when you do subsequently legally complete the sale of A. The higher rate only applies where there is a "delay" in the sale of A

assuming you have never been made a legal owner of A, then you are actually a very straightforward example given by HMRC. Married couple, own a main and rental, replacing the main - see example 1
  SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

SDLT_Geek said:

stu1892 said:

From what you say, property A is clearly your only residence, you have lived there with family since 2018.

To escape the 5% surcharge for SDLT, you need to meet all of the conditions for the "replacement" of an only or main home.  They are set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

You should be able to meet condition 2 (about the disposal) on the basis that your spouse is disposing of the property you have been living in.

Can I just thank you both for your great replies, it's really put my mind at ease.

I just don't trust the likes of the tax office and insurance companies and feel they'll do everything they can to sting you.

Is there anywhere i can get this confirmed in some kind of official / legal letter even prior to our own conveyancing?

Thanks again.

Stu

I suggest you check that HMRC guidance page yourself to make sure you come within the "replacement rules" and then chose conveyancers to act for you who are able to advise on the SDLT. 

If you set out the facts clearly then conveyancers should be able to tell you what they expect the SDLT to be at the point of giving you a quote.  If they understand what they are doing at that point, then that is a good sign.

Bookworm105

stu1892 said:

Is there anywhere i can get this confirmed in some kind of official / legal letter even prior to our own conveyancing?

why do you want such a "letter"?

the rules and how HMRC operate them are set out in HMRC's own, publicly available, instructions. If you read all of these that you will be more knowledgeable than some conveyancers we have seen others come on here to query the advice the conveyancer gave them

SDLTM09730 - SDLT - higher rates for additional dwellings: Contents - HMRC internal manual - GOV.UK

particularly:
SDLTM09764 - SDLT - higher rates for additional dwellings: joint purchasers - Para 2(3) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

SDLTM09766A - SDLT - higher rates for additional dwellings: Individuals - purchasing two or more dwellings (2) - Summary of Conditions - Para 6 Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

SDLTM09812 - SDLT - higher rates for additional dwellings: Meaning of 'main residence' - HMRC internal manual - GOV.UK