Additional stamp duty and reclaim

mcplumb

I purchased a flat in 2002 and lived there for 5 years. It has been rented out and I have been renting another property since that point

The flat is now under offer but won't complete prior to purchase of another property.

The new house purchase will attract additional stamp duty as I will at that point own two properties.

My confusion is over the reclaim of the additional stamp duty. Can I reclaim this when the flat sells?

Tia

SDLT_Geek

mcplumb said:

I purchased a flat in 2002 and lived there for 5 years. It has been rented out and I have been renting another property since that point

The flat is now under offer but won't complete prior to purchase of another property.

The new house purchase will attract additional stamp duty as I will at that point own two properties.

My confusion is over the reclaim of the additional stamp duty. Can I reclaim this when the flat sells?

Tia

Is the house you are buying in England, so that the relevant stamp is stamp duty land tax and you are having to pay the extra 5% on completion?

If so, you will not be able to recover the extra 5% because you had not been living in the flat as your only or main residence within three years of buying the new house.

mcplumb

What if I move into the flat? 

mcplumb

20k extra for the sake of a few months dual ownership.... wow. It looks I've been misinformed by others over the 3 year rule. 

user1977

mcplumb said:

What if I move into the flat? 

As above it needs to genuinely become your main residence. I can't see that's possible if you've got an ongoing sale.

sheramber

Can you delay the purchase until the flat sale goes through?

Remember you will may be due to pay CGT  on the sale of the flat as it has not been your  main residence.

Any tax due needs to be paid within 60 days of the sale. 

mcplumb

A delay might be possible, although I'd wear the 20k rather than lose our onward purchase.

I appreciate "fair" doesn't come into these matters, but it does feel like I'm trapped by the rules on this one.

Purchased flat in 2002 with mortgage for 82k

Moved out and rented it out all good until... major works by the Freeholders

Major work bill around 40k

Flats now un mortgageable 

Pre major work value 145k, now accepted an offer at 80k 

Now add it a 20k SDLT bill - really ! Everyone including legal folk have always told me not to worry "you have three years to sell the flat"

Bookworm225

mcplumb said:

Now add it a 20k SDLT bill - really ! Everyone including legal folk have always told me not to worry "you have three years to sell the flat"

did it not cross your mind to check 3 years from when?

mcplumb

You might have thought my solicitor would have qualified his question by asking how long I'd owned it for and when I last lived there 

Even now reading the HMRC docs and reclaim form it says "Previous main residence", well it was a previous main residence! It should say "have you lived in the property in the last three years"

Bookworm225

mcplumb said:

! It should say "have you lived in the property in the last three years"

it does, but what people (including conveyancers) overlook is that the .Gov webpages are pitched at the level of the barely literate so are dumbed down to the point of uselessness.

You need to always research the HMRC manuals for all tax related issues (and cross check to actual legislation to be 100% sure) 

SDLTM09800 - SDLT - higher rates for additional dwellings: Condition D - general - Para 3(6) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK read second of 5 conditions listed in both scenarios 

Finance Act 2016  schedule 4ZA part 2 para 3 (6) (c)
"at any time during that period of three years the sold dwelling was the purchaser's only or main residence"