Help! Second Home Stamp Duty Mess!

dollardan

Hi all! I am reaching out for some help in what seems a unique, but may actually be quite a common situation. 

I am buying a new property in England with my partner and have been told I need to pay second home stamp duty on it. 

My background situation is as follows.

I owned a house with my now ex wife,
we separated in November 2019, and had a decree Naisi in 2020. We were then working out how to split finances for a long period.

In that time I was living in a caravan on my dads drive, before I eventually needed a space for my boys at weekends and I purchased a house in November 2022. Despite my protest to the solicitor at the time, that I was separated and buying the new property alone. I was told I had to pay second home duty on it. I did and moved in.

Then in July 2025 we finally had the court order for the divorce, and the marital property was transferred to my now ex wife. and the decree absolute was issued.

I am still living in my own property which I paid second home duty on.

I now want to buy a new larger house with my new partner. For which I am told I need to pay second home duty for a second time. (She owns no property and never has, and is from the USA). But this time it’s much more. 5% of a bigger house value.

Please help advise.
1. Can I state that my new house is a replacement of my former marital primary home following the Transfer and with the TR1 document for the primary to my ex wife. and pay just single home duty and keep my current small house that I paid second home duty on as a rental?

2. Do I need to apply for a refund of second home on my current small property. 

Then either sell it before moving, or pay second home duty on the new larger one, sell my old one and then claim back the second home duty for a second time on the new property?

The solicitors really are not helpful. To them it’s “if you own any other property when we make the transaction it has to be second home duty”. I don’t think most have ever seen the Second home duty handbook!

Any help, advice would be greatly appreciated let me know if further clarification needed.

user1977

Replacing your main residence needs to have an overlap of not more than 3 years, but it sounds like you moved out of the marital home in 2019 and didn't dispose of your interest until 2025? So I don't think that's open to you in relation to your last purchase.

Not clear what your timescales are for the next move - if you are buying and selling simultaneously there's no additional tax due, if you buy first then you pay the additional amount in the first instance and can then reclaim after completion of the sale.

RAS

@SDLT_Geek

Should the 2022 deal have accrued the second home penalty? 

And proving the OP is selling there current home, should they pay the penalty for the new purchase?

dollardan

@user1977 Reference timing. It will probably overlap, which I can cover the additional duty (if needed). So it’s a question of if I can keep my current property as a rental and not pay second home on the new. Or if I can claim a refund on the current property, then sell the current property and then reclaim also on the new one.

user1977

You cannot increase the number of properties you own without paying the additional amount. And I can't see scope for claiming any refund on your current property.

dollardan

@user1977 My understanding is that you have 3 years to dispose of a property to claim the refund. If I purchased the Property November 2022. I would have had to dispose of my marital home by November this year, and that transacted off me in July 2025. That’s even if I should ever have had to pay it on the property I am currently in. Assuming it was paid in error at the time in 2022. Surely there is a case to have it refunded?

user1977

dollardan said:

@user1977 My understanding is that you have 3 years to dispose of a property to claim the refund. If I purchased the Property November 2022. I would have had to dispose of my marital home by November this year, and that transacted off me in July 2025.

It needs to have been your main residence within the 3 year period though. Did you move out in 2019?

SDLT_Geek

dollardan said:

Hi all! I am reaching out for some help in what seems a unique, but may actually be quite a common situation. 

I am buying a new property in England [Property 3] with my partner and have been told I need to pay second home stamp duty on it. 

My background situation is as follows.

I owned a house with my now ex wife [Property 1],
we separated in November 2019, [The date you moved out will be crucial, because of the need to have lived in Property 1 at some point within the three years before you completed the purchase of Property 2.] and had a decree Naisi in 2020. We were then working out how to split finances for a long period.

In that time I was living in a caravan on my dads drive, before I eventually needed a space for my boys at weekends and I purchased a house [Property 2] in November 2022 [The date you completed the purchase of Property 2 will be crucial, because of the need to have lived in Property 1 at some point within the three years before you completed the purchase of Property 2.].

Despite my protest to the solicitor at the time, that I was separated and buying the new property alone. I was told I had to pay second home duty on it.  [That sounds correct, at that time you still had a share in Property 1, there was no "property adjustment order" and you did not meet the conditions for "replacing your main residence" as explained here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800] I did and moved in.

Then in July 2025 [good, that was within 3 years of you completing the purchase of Property 2 and within the last 12 months (the time limit for getting a refund application in}] we finally had the court order for the divorce, and the marital property [Property 1] was transferred to my now ex wife. and the decree absolute was issued.

I am still living in my own property [Property 2] which I paid second home duty on.

I now want to buy a new larger house [Property 3] with my new partner. For which I am told I need to pay second home duty for a second time. [Yes, if you still own Property 2 when you complete the purchase of Property 3, the extra 5% will be due] (She owns no property and never has, and is from the USA). But this time it’s much more. 5% of a bigger house value.[Correct.]

Please help advise.
1. Can I state that my new house is a replacement of my former marital primary home following the Transfer and with the TR1 document for the primary to my ex wife. and pay just single home duty and keep my current small house that I paid second home duty on as a rental? [No, for multiple reasons.]

2. Do I need to apply for a refund of second home on my current small property. [You might be entitled to a refund of the extra 3% paid on Property 2 if you meet the three year test referred to above (about having lived in Property 1 within the three years before you bought Property 2).  It seems touch and go.  Was Property 1 your main or only residence at some point in the three years before your purchase of Property 2?  You refer to dates of Nov 2019 and Nov 2022 above.  You need to work through the four conditions in SDLTM09800 for a case where the old property is disposed of after the new property is bought.]

Then either

(a) sell it [Property 2] before moving,  or
(b)  pay second home duty on the new larger one [Property 3], sell my old one [Property 2] and then claim back the second home duty for a second time on the new property [Property 3]?

Yes, with (a) you would not have to pay the extra 5% on Property 3 at the time of the later / simultaneous purchase of Property 3.

With (b) you should be able to claim back the extra 5% paid on Property 3 if you sell Property 2 within three years of buying Property 3.

The solicitors really are not helpful. To them it’s “if you own any other property when we make the transaction it has to be second home duty”. I don’t think most have ever seen the Second home duty handbook!

Any help, advice would be greatly appreciated let me know if further clarification needed.

Lots of notes in bold above.

dollardan

@SDLT_Geek Thank you for taking the time to look at this! You are awesome.. Although we separated in Nov 19. I was still living there for some time before I went to my father’s. The purchase of property 2 was actually 16th Nov 2022. I have submitted the request for refund. 

Tomorrow I will instruct an agent to sell property 2. If it happens before property 3 then great. If not then I’ll have to pay the higher rate on property 3 and claim it back once property 2 sells. Thank you for the advice!