Can I reclaim the second home SDLT surcharge?

WombatDombat

Hi all,

Here's my scenario (including some rounded numbers, in case that's helpful)
1. I own my own home (house A) with no mortgage. Value £600k
2. I'm considering buying a second home (house B ), at auction. Estimated value: £600k
3. If I win the auction, I'll be liable for £20k of 'normal' SDLT plus £30k of additional surcharge (5% of £600k)
4. I would split 75% of house B's garden into a separate plot and sell house B quickly, for an estimated £450k (thus valuing the plot at £150k). 
5. Then I'll sell house A (for £600k) within three years on buying house B, rent for a year whilst I build on the plot, to create house C which I'll then move in to.

There are two options as I see it regarding the refund of the £30k additional surcharge SDLT.

A. I am NOT eligible for a refund because I sold house B before selling house A
B. I AM eligible for a refund because I am living in part of house B (ie the garden of) after selling house A.

Am I clutching at straws?

SDLT_Geek

WombatDombat said:

Hi all,

Here's my scenario (including some rounded numbers, in case that's helpful)
1. I own my own home (house A) with no mortgage. Value £600k
2. I'm considering buying a second home (house B ), at auction. Estimated value: £600k
3. If I win the auction, I'll be liable for £20k of 'normal' SDLT plus £30k of additional surcharge (5% of £600k)
4. I would split 75% of house B's garden into a separate plot and sell house B quickly, for an estimated £450k (thus valuing the plot at £150k). 
5. Then I'll sell house A (for £600k) within three years on buying house B, rent for a year whilst I build on the plot, to create house C which I'll then move in to.

There are two options as I see it regarding the refund of the £30k additional surcharge SDLT.

A. I am NOT eligible for a refund because I sold house B before selling house A
B. I AM eligible for a refund because I am living in part of house B (ie the garden of) after selling house A.

Am I clutching at straws?

You will not be eligible for a refund of the extra 5% because you fail a key condition.  That is  the condition that at the date of completion of the purchase of house B you do not intend to live in the dwelling then existing on the property.