SDLT for non-uk residents - SURCHARGE QUESTION

_Penny_Dreadful

thenap80 said:

user1977 said:

thenap80 said:

user1977 said:

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

But what if I didnt end up moving back to UK and so did not use it as my main residence? Staying instead in rented accomodation outside of UK ?

Whether you use the new property as your residence or not makes no difference to the SDLT, if that's your question?

user1977 said:

thenap80 said:

user1977 said:

thenap80 said:

sorry to come back with a question - you  are great...
Condition D though. Even if I rent in Switzerland then that rented place is my 'main residence' no? And then if I do end up not moving back to UK, condition D is met, would you agree? 

"Replacing your main residence" here means disposing of your (major) interest in your old residence i.e. selling it. You're not, because you (presumably) only have a short-term lease which is not a "major interest".

Otherwise that exemption would apply to everybody who moved into their additional property when they bought it, which would be a wide-open loophole!

But what if I didnt end up moving back to UK and so did not use it as my main residence? Staying instead in rented accomodation outside of UK ?

Whether you use the new property as your residence or not makes no difference to the SDLT, if that's your question?

sorry to sound thick, but are yopu saying that in that case I would not have to pay higher rate stamp duty. just the normal rate (plus the 2percent for being non resident in UK)????

From HMRC website:
"Where a purchaser previously lived in accommodation which they (or their spouse or civil partner) did not own, then moving out of this accommodation does not count as replacing their main residence for the purpose of Condition D."

So in effect I am not replacing my main residence. And so that ticks condition D. 

When you meet all 4 conditions the higher rate of SDLT is due. 

Presumably you’re purchasing somewhere worth £40k or more so condition A is met. 

Condition B is going to be met if the interest in the dwelling purchased is either not subject to a lease or, if it is subject to a lease, the lease has no more than 21 years left before it expires, as at the date of the transaction. Condition B is likely to be met with your transaction as it’s really to prevent someone purchasing a freehold being charged the higher rate when there’s a leasehold of 21+ years subject to the freehold. 

Your wife owns another property so as long as it’s worth £40k+ then condition C is met even if you buy the new property solely in your name. 

Condition D will also be met as you’re not selling your current main residence to purchase a new main residence. 

thenap80

_Penny_Dreadful said:

thenap80 said:

I live abroad so not in UK. 
I used to have a house that I let out in UK but I sold that two years back. Ive been away for 5 years. 
I want to buy a new house in UK to move back soon.325k house. 
I can see that I have to pay a surcharge for being a non UK resident but might be able to reclaim that if i do move back. 
But there is another surcharge for additional properties - and I cant work out if this is apples to me. I own no other property but does renting a place where I currently livce in Switzerland, make the purchase of any property a second home, especially if I dont move bacmk into a place I buy straight away. 

So thankful for help as I cant fathom it using the websites Ive been looking at. 

I'm assuming you're buying in England where SDLT is the applicable tax.  

Four conditions must be met for the higher rate of SDLT for the purchase of residential properties to apply.

• Condition A - the chargeable consideration is £40,000 or more

• Condition B - the major interest purchased is not subject to a lease which has more than 21 years to run on the date of purchase

• Condition C - the purchaser owns a major interest (with a market value of £40,000 or more) in another dwelling which is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling, and
• Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence.

From what you describe I don't see how all four conditions would apply to your situation.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

RE: condition C - my wife's UK property is leasehold with 950 years on the lease - so significantly more than 21 years. So would this mean I don't satisfy condition C and don't have to pay higher rate??? Thank you for clarifying if you can,,,,

_Penny_Dreadful

thenap80 said:

_Penny_Dreadful said:

thenap80 said:

I live abroad so not in UK. 
I used to have a house that I let out in UK but I sold that two years back. Ive been away for 5 years. 
I want to buy a new house in UK to move back soon.325k house. 
I can see that I have to pay a surcharge for being a non UK resident but might be able to reclaim that if i do move back. 
But there is another surcharge for additional properties - and I cant work out if this is apples to me. I own no other property but does renting a place where I currently livce in Switzerland, make the purchase of any property a second home, especially if I dont move bacmk into a place I buy straight away. 

So thankful for help as I cant fathom it using the websites Ive been looking at. 

I'm assuming you're buying in England where SDLT is the applicable tax.  

Four conditions must be met for the higher rate of SDLT for the purchase of residential properties to apply.

• Condition A - the chargeable consideration is £40,000 or more

• Condition B - the major interest purchased is not subject to a lease which has more than 21 years to run on the date of purchase

• Condition C - the purchaser owns a major interest (with a market value of £40,000 or more) in another dwelling which is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling, and
• Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence.

From what you describe I don't see how all four conditions would apply to your situation.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

RE: condition C - my wife's UK property is leasehold with 950 years on the lease - so significantly more than 21 years. So would this mean I don't satisfy condition C and don't have to pay higher rate??? Thank you for clarifying if you can,,,,

The leasehold itself is not subject to another lease therefore condition C will be met if that leasehold is worth £40k+. 

From all that you’ve told us you will be paying the higher rate of SDLT. 

SDLT_Geek

_Penny_Dreadful said:

thenap80 said:

_Penny_Dreadful said:

thenap80 said:

I live abroad so not in UK. 
I used to have a house that I let out in UK but I sold that two years back. Ive been away for 5 years. 
I want to buy a new house in UK to move back soon.325k house. 
I can see that I have to pay a surcharge for being a non UK resident but might be able to reclaim that if i do move back. 
But there is another surcharge for additional properties - and I cant work out if this is apples to me. I own no other property but does renting a place where I currently livce in Switzerland, make the purchase of any property a second home, especially if I dont move bacmk into a place I buy straight away. 

So thankful for help as I cant fathom it using the websites Ive been looking at. 

I'm assuming you're buying in England where SDLT is the applicable tax.  

Four conditions must be met for the higher rate of SDLT for the purchase of residential properties to apply.

• Condition A - the chargeable consideration is £40,000 or more

• Condition B - the major interest purchased is not subject to a lease which has more than 21 years to run on the date of purchase

• Condition C - the purchaser owns a major interest (with a market value of £40,000 or more) in another dwelling which is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling, and
• Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence.

From what you describe I don't see how all four conditions would apply to your situation.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

RE: condition C - my wife's UK property is leasehold with 950 years on the lease - so significantly more than 21 years. So would this mean I don't satisfy condition C and don't have to pay higher rate??? Thank you for clarifying if you can,,,,

The leasehold itself is not subject to another lease therefore condition C will be met if that leasehold is worth £40k+. 

From all that you’ve told us you will be paying the higher rate of SDLT. 

Yes, it seems clear that OP would on the facts given, pay both the extra 2% SDLT for non UK resident buyers and the extra 5% for additional properties:

2% extra: For the test at the time of purchase, the question is whether the buyer has spent 183 days or more in the UK in the year up to the completion of the purchase.  If no, then the extra 2% is due.  Unless, for spouses buying together, one of the spouses meets the 183+ day test in the UK.

5% extra:  OP's spouse owns another property and (because there is no sale / disposal of a property lived in within the last three years to rely on) the replacement rules do not save OP.  So the extra 5% will be due, whether or not OP intends to live in the property being bought.

thenap80

Thanks for explanations. 

I am more up to speed now and understand more.

If you are able to help one more time???….
if my wife sells the property she has in UK within three years, can I reclaim the higher rate tax I would pay? We have not lived in that property of hers for six years. 

user1977

thenap80 said:

if my wife sells the property she has in UK within three years, can I reclaim the higher rate tax I would pay? We have not lived in that property of hers for six years. 

No, because that still wouldn't be replacing your main residence.

The (only) way to avoid the higher rate would be for her to sell her property before (or simultaneously with) your new purchase.

thenap80

I understand I still would still fulfil Condition D in not replacing main residence.

But condition C will not be met…. Albeit at a later date when she sells her flat. Or it is only relevant on the date of purchase of the new property?

user1977

thenap80 said:

I understand I still would still fulfil Condition D in not replacing main residence.

But condition C will not be met…. Albeit at a later date when she sells her flat. Or it is only relevant on the date of purchase of the new property?

Anybody could claim that they won't be the owner at a future date. You can't just pick and choose the relevant dates for each condition, they all relate to the date of completion of your purchase.

sheramber

thenap80 said:

Thanks for explanations. 

I am more up to speed now and understand more.

If you are able to help one more time???….
if my wife sells the property she has in UK within three years, can I reclaim the higher rate tax I would pay? We have not lived in that property of hers for six years. 

As your wife’s house was not your main residence selling it  is not selling or disposing of your main residence. 

You must sell/ dispose of your unsold main residence within 3 years of buying the new main residence to reclaim the extra stamp duty. 

_Penny_Dreadful

thenap80 said:

I understand I still would still fulfil Condition D in not replacing main residence.

But condition C will not be met…. Albeit at a later date when she sells her flat. Or it is only relevant on the date of purchase of the new property?

Condition C will be met at the date of your transaction and that's what matters.