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  • FIRST POST
    • w00519772
    • By w00519772 16th Apr 17, 8:55 PM
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    w00519772
    What if the home I am buying will be!my main residence?
    • #1
    • 16th Apr 17, 8:55 PM
    What if the home I am buying will be!my main residence? 16th Apr 17 at 8:55 PM
    I was reading about the new stamp duty rules: http://www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/#qWJlsSA2pe2gYre0.97 and specifically the question: What if the home I am buying will be!my main residence?

    How does this work in the scenario where you buy a new property; move house to the new property and then rent out your existing property? I assume you would have to pay the higher rate of stamp duty? On Zoopla it says:

    "A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."
    But replacing your main!residence means the last one (or at least a 'major interest' in it) will need to be disposed of!(eg,!SOLD or GIFTED).!If!

    I guess "dispose" does not extend to renting out your current property and moving to the new property?
Page 1
    • glasgowdan
    • By glasgowdan 16th Apr 17, 8:57 PM
    • 2,857 Posts
    • 3,201 Thanks
    glasgowdan
    • #2
    • 16th Apr 17, 8:57 PM
    • #2
    • 16th Apr 17, 8:57 PM
    Correct...
    • AFF8879
    • By AFF8879 16th Apr 17, 9:23 PM
    • 297 Posts
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    AFF8879
    • #3
    • 16th Apr 17, 9:23 PM
    • #3
    • 16th Apr 17, 9:23 PM
    To be clear, you mean disposing of your main residence to buy a new one? You wouldn't need to sell your BTL too...

    But, you wouldn't be able to rent out your current main residence, keep your existing BTL, and buy a third property as your main residence without incurring the 3% higher rate.
    • w00519772
    • By w00519772 16th Apr 17, 9:24 PM
    • 1,189 Posts
    • 213 Thanks
    w00519772
    • #4
    • 16th Apr 17, 9:24 PM
    • #4
    • 16th Apr 17, 9:24 PM
    Correct...
    Originally posted by glasgowdan
    I was reading about Capital Gains Tax here and specifically this tax year: https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances

    The way I understand this is:

    1) If you buy a property and move in to it (renting out your old property), then you pay 18% or 28% tax.
    2) If you own a property and you buy another property; renovate it and sell it (without moving into it), then you pay: 10% or 20% tax.
    3) If you buy a house move into it and sell your old house then you do not pay any CGT because of Private Residence Relief.

    Have I understood this correctly?
    Last edited by w00519772; 16-04-2017 at 9:29 PM.
    • G_M
    • By G_M 16th Apr 17, 10:38 PM
    • 43,799 Posts
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    G_M
    • #5
    • 16th Apr 17, 10:38 PM
    • #5
    • 16th Apr 17, 10:38 PM
    ....

    I guess "dispose" does not extend to renting out your current property and moving to the new property?
    Originally posted by w00519772



    Nice try!
    • w00519772
    • By w00519772 5th May 17, 12:53 PM
    • 1,189 Posts
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    w00519772
    • #6
    • 5th May 17, 12:53 PM
    • #6
    • 5th May 17, 12:53 PM
    How does it work with a Private Limited Company. Say you own your own property and then purchase a property, which is then owned by a property. The Ltd company then owns the house (one house). Do you still pay the additional stamp duty?

    I am just trying to fully understand the financial implications before I consider doing this.
    • 00ec25
    • By 00ec25 5th May 17, 1:04 PM
    • 6,256 Posts
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    00ec25
    • #7
    • 5th May 17, 1:04 PM
    • #7
    • 5th May 17, 1:04 PM
    I was reading about Capital Gains Tax here and specifically this tax year: https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances

    The way I understand this is:

    1) If you buy a property and move in to it (renting out your old property), then you pay 18% or 28% tax.
    2) If you own a property and you buy another property; renovate it and sell it (without moving into it), then you pay: 10% or 20% tax.
    3) If you buy a house move into it and sell your old house then you do not pay any CGT because of Private Residence Relief.

    Have I understood this correctly?
    Originally posted by w00519772
    please do a lot more reading !

    1. the CGT rate when you sell the rental property would be 18 and or 28% depending on your "total income" that tax year of the sale and also obviously whether you have a net taxable gain to start with having claimed any available relief and your allowance (per owner)

    2. that would be property trading/developing and is subject to income tax, not CGT

    3. correct. the sale would be exempt from CGT. Whether you buy another property or not is irrelevant.


    when reading it is often best to start with the HMRC information rather than journalists abridged versions. Yes the HMRC info can be heavy, but it is complete...

    https://www.gov.uk/capital-gains-tax/overview

    https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances

    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet

    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64200c
    • 00ec25
    • By 00ec25 5th May 17, 1:07 PM
    • 6,256 Posts
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    00ec25
    • #8
    • 5th May 17, 1:07 PM
    • #8
    • 5th May 17, 1:07 PM
    How does it work with a Private Limited Company. Say you own your own property and then purchase a property, which is then owned by a property. The Ltd company then owns the house (one house). Do you still pay the additional stamp duty?

    I am just trying to fully understand the financial implications before I consider doing this.
    Originally posted by w00519772
    read the SDLT guide rather than the bits and pieces which other websites have in isolation

    https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-for-purchases-of-additional-residential-properties

    companies are at Chapter 5 and question 24 will be relevant!
    • w00519772
    • By w00519772 12th Nov 17, 12:19 PM
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    • 213 Thanks
    w00519772
    • #9
    • 12th Nov 17, 12:19 PM
    • #9
    • 12th Nov 17, 12:19 PM
    I have a few questions:

    1) I was reading this: https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1547862. This is implying that you can setup a limited company to buy a second property without paying Stamp Duty. Surely that is not right?

    2) What are the rules for limited companies? I believe in order to be exempt; the company has to own at least 15 properties. Is that correct?

    I am just trying to understand what my options are if I wanted to move to another city. I own one property at the moment (the property I live in).
    • 00ec25
    • By 00ec25 12th Nov 17, 12:38 PM
    • 6,256 Posts
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    00ec25
    I have a few questions:

    1) I was reading this: https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1547862. This is implying that you can setup a limited company to buy a second property without paying Stamp Duty. Surely that is not right?

    2) What are the rules for limited companies? I believe in order to be exempt; the company has to own at least 15 properties. Is that correct?

    I am just trying to understand what my options are if I wanted to move to another city. I own one property at the moment (the property I live in).
    Originally posted by w00519772
    it says nothing of the sort and it predates the higher rate SDLT anyway. Why are you ignoring the actual tax rules from HMRC websites for which you have already been given the links yet appear not to have read?

    you have already been given the answer to Q2 in my previous post.

    avoiding SDLT but then ending up owning a company which is being charged much higher financing rates than you'd be, and is taxed on profit before you get it and the money is taxed again as your now personal income is an "excellent" idea.

    If you want to persist in exploring ways to (legally) avoid tax then pay for professional advice before your amateur attempts bite you. You need to balance SDLT, CGT and income tax which so far you have failed to do with your focus on SDLT
    Last edited by 00ec25; 12-11-2017 at 1:08 PM.
    • davidmcn
    • By davidmcn 12th Nov 17, 12:50 PM
    • 7,327 Posts
    • 7,368 Thanks
    davidmcn
    1) I was reading this: https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1547862. This is implying that you can setup a limited company to buy a second property without paying Stamp Duty.
    Originally posted by w00519772
    Apart from the fact that that isn't true, I'm not sure why you think it implies it - I can't see anything in that thread about stamp duty?
    • w00519772
    • By w00519772 13th Nov 17, 8:27 PM
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    • 213 Thanks
    w00519772
    Apart from the fact that that isn't true, I'm not sure why you think it implies it - I can't see anything in that thread about stamp duty?
    Originally posted by davidmcn
    Thanks. Agreed. I think I must of posted the wrong link. I have read a lot of articles about this recently.
    • w00519772
    • By w00519772 13th Nov 17, 8:31 PM
    • 1,189 Posts
    • 213 Thanks
    w00519772
    read the SDLT guide rather than the bits and pieces which other websites have in isolation

    https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-for-purchases-of-additional-residential-properties

    companies are at Chapter 5 and question 24 will be relevant!
    Originally posted by 00ec25
    Thanks I have now read through this. Would there be anything stopping me from moving from property to property renovating them (living in them whilst I renovate them - one at a time). Say I renovated one every few years. Again I am just looking at my options.
    • 00ec25
    • By 00ec25 13th Nov 17, 10:41 PM
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    00ec25
    Thanks I have now read through this. Would there be anything stopping me from moving from property to property renovating them (living in them whilst I renovate them - one at a time). Say I renovated one every few years. Again I am just looking at my options.
    Originally posted by w00519772
    if you ONLY own one property at any one time then self evidentially it is your "main" home. Thus each time you sell that and replace it with a new property (to do up) you are replacing your main home with a new main home and thus not liable to the the higher rate SDLT

    however the fact you are living in a house owned by your own company opens up huge income tax implications that you have not considered. You'd be taxed on a benefit in kind charge for starters
    Last edited by 00ec25; 14-11-2017 at 12:08 PM.
    • AnotherJoe
    • By AnotherJoe 13th Nov 17, 11:25 PM
    • 9,003 Posts
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    AnotherJoe
    surely you can understand the rules?

    if you ONLY own one property at any one time and live in it then self evidentially it is your "main" home. Thus each time you sell that and replace it with a new property (to do up) you are replacing your main home with a new main home and thus not liable to the the higher rate SDLT


    there is a remote risk in your stated plan that HMRC may regard you as a (serial) property developer and thus subject to income tax on your profits
    Originally posted by 00ec25
    Added the missing words to make sense, because there are plenty of posters here who own one property but let that out, and live elsewhere , so it isn’t their “main home”.
    • 00ec25
    • By 00ec25 14th Nov 17, 12:03 PM
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    00ec25
    Added the missing words to make sense, because there are plenty of posters here who own one property but let that out, and live elsewhere , so it isn!!!8217;t their !!!8220;main home!!!8221;.
    Originally posted by AnotherJoe
    fair enough, however the OP's question that I quoted did specifically state he would be living in each property as his home hence I did not repeat that part, but I've now also coloured it red for the sake of it
    Last edited by 00ec25; 14-11-2017 at 12:05 PM.
    • w00519772
    • By w00519772 14th Nov 17, 9:22 PM
    • 1,189 Posts
    • 213 Thanks
    w00519772
    Added the missing words to make sense, because there are plenty of posters here who own one property but let that out, and live elsewhere , so it isn!!!8217;t their !!!8220;main home!!!8221;.
    Originally posted by AnotherJoe
    Thanks. Say I:

    1) Moved to a new city and rented a property
    and
    2) Rented out my property for x years (where x is a number).

    and then:

    After x years I sold my property. Would I have to pay Capital Gains Tax here on the property I once lived in and then rented out using consent to let and then buy to let.
    • w00519772
    • By w00519772 6th Jan 18, 12:57 PM
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    • 213 Thanks
    w00519772
    I was reading this article: https://www.propertytribes.com/ways-landlords-can-avoid-extra-stamp-duty-surcharge-t-127622715.html. I am confused by point seven. Is it implying that if you live in a house (which I have done for five years) and then remortgage as by to let, then you can buy another property without paying the 3%? It seems a bit too good to be true to me. I must of misunderstood.
    • SDLT Geek
    • By SDLT Geek 6th Jan 18, 1:48 PM
    • 195 Posts
    • 123 Thanks
    SDLT Geek
    I was reading this article: https://www.propertytribes.com/ways-landlords-can-avoid-extra-stamp-duty-surcharge-t-127622715.html. I am confused by point seven. Is it implying that if you live in a house (which I have done for five years) and then remortgage as by to let, then you can buy another property without paying the 3%? It seems a bit too good to be true to me. I must of misunderstood.
    Originally posted by w00519772
    The link you post is to an article in November 2015, well before the 3% surcharge rules were published in March 2016. You are grasping at straws! No, it does not say what you hope it says.
    • w00519772
    • By w00519772 6th Jan 18, 3:37 PM
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    w00519772
    The link you post is to an article in November 2015, well before the 3% surcharge rules were published in March 2016. You are grasping at straws! No, it does not say what you hope it says.
    Originally posted by SDLT Geek
    Well, what does it say then? I am just trying to understand my options - certainly not grasping at straws.
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