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kakalokia
Posts: 30 Forumite
Hi all,
I was wondering if someone can please help me with a question regarding stamp duty.
I'm planning to rent out my current property, and buy my parent's home (at a discounted price) to move into and have as my main residence.
The mortgage adviser suggested that I should do some research around stamp duty as I may need to pay extra if I'm buying a second property.
I've read around and still don't feel I found a clear answer. Some articles suggest that if the new property I'm buying becomes my main residence, then I don't have to pay extra on the stamp duty if I keep my old property and rent it out. Is this correct? If not, how much stamp duty would I have to pay in total if I'm buying a second property for let's say £140,000?
Thanks
I was wondering if someone can please help me with a question regarding stamp duty.
I'm planning to rent out my current property, and buy my parent's home (at a discounted price) to move into and have as my main residence.
The mortgage adviser suggested that I should do some research around stamp duty as I may need to pay extra if I'm buying a second property.
I've read around and still don't feel I found a clear answer. Some articles suggest that if the new property I'm buying becomes my main residence, then I don't have to pay extra on the stamp duty if I keep my old property and rent it out. Is this correct? If not, how much stamp duty would I have to pay in total if I'm buying a second property for let's say £140,000?
Thanks
0
Comments
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No it’s not correct, going from 1 to 2 houses means you pay the additional stamp duty.
How deeply have you researched the wisdom or otherwise of becoming a landlord?0 -
I've read around and still don't feel I found a clear answer.
summary:
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property
you will pay the higher rate, assuming that is on 140k it will cost you £4,500
https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro
explained in total detail here:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm097300 -
I'm planning to rent out my current property, and buy my parent's home (at a discounted price) to move into and have as my main residence
It sounds very likely from what you say that SDLT will be due at the higher rates. You are not "replacing" a main residence unless you have sold / disposed of a previous one.
But there is another issue here. You say you are buying at a discounted price. Depending on how the purchase is structured you might pay SDLT worked out on:
(a) The discounted price
(b) The value.
I suggest you look up about gifted deposits, gifted equity, concessionary purchases and transfers at undervalue.0 -
Surely the answer will be (b) as the OP is buying from a "connected person"?0
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Don't become a BTL landlord. If you really must, then pay your tax to be so.0
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"It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
That only applies to purchases made by corporations I believe.
This article (admittedly from 2 years ago) suggests otherwise.
https://kb.taxcalc.com/22520 -
But there is another issue here. You say you are buying at a discounted price. Depending on how the purchase is structured you might pay SDLT worked out on:
(a) The discounted price
(b) The value.
I suggest you look up about gifted deposits, gifted equity, concessionary purchases and transfers at undervalue.
A key to saving SDLT is to establish early that the lender is happy for the purchase price to be stated on all the documents as the actual reduced price (so it is a concessionary purchase / purchase at undervalue).
Some lenders insist on treating it as if the parents first gift a sum of money, so that the purchase is then made at the full value.0
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