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Stamp duty for primary home when owning 2 BTLs


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Hi guys, 

Just want to check my understanding as I move towards a transaction. 

I currently own 2 BTLs but live in rented accommodation as my main residence. 

We're looking at buying a new place which will be our primary residence. Am I correct that under the new stamp duty rules that I won't have to pay stamp duty under 500k? My understanding is that the 3% won't apply as this will be my primary residence. 

One other thing that might complicate is that the property includes an annex and a 1 bed cottage that we'll be using for holiday lets. ||

Thank you!

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Unfortunately because you already own property and subsequent purchase would attract stamp duty under the second home levy, and so you would pay 3% up to £500k

https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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1 hour ago, Stuart Phillips said:

Unfortunately because you already own property and subsequent purchase would attract stamp duty under the second home levy, and so you would pay 3% up to £500k

https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates

Hi Stuart, 

Thanks for the answer. 

I feared that might well be the case. However after working through the SDLT calculator (https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro) it indicates that the 3% won't apply to me as the purchase will be for my primary residence. I had to answer the following questions: 

"Will the purchase of the property result in owning two or more properties?" YES 

"Is the property being purchased replacing your main residence?" YES 

This spits out an answer to me that show the 3% would not be payable, hence my utter confusion! 

Wondering if you have any further thoughts on that? 

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The property being purchased is not replacing your main residence though. If you were selling one residence and buying another you wont pay the surcharge, however because you are keeping property in the background it counts as a second residence. Thats my understanding, but Im not a tax advisor though so a solicitor would be able to confirm this for you definitively.

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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9 minutes ago, Stuart Phillips said:

The property being purchased is not replacing your main residence though. If you were selling one residence and buying another you wont pay the surcharge, however because you are keeping property in the background it counts as a second residence. Thats my understanding, but Im not a tax advisor though so a solicitor would be able to confirm this for you definitively.

Thanks Stuart, 

Yes I agree, I think my situation is pretty murky as to my mind I am replacing my main residence as neither of the properties that I own are my main residence. Nothing's ever simple is it!?! At least that's what I'm hoping anyway....

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12 hours ago, nicholas_b said:

You will have to pay the 3%. I was in the same position last year. Couple of BTLs, no primary residence, got a primary residence and had the 3% to pay which I didn't realise until the solicitor told me... 

Thanks Nicholas, 

I also just checked with HMRC and they confirmed the same as you, 

For anyone else that comes across this thread for the same subject there's a good outline of this anomaly in this article too: https://www.ft.com/content/bb51e06e-2bd1-11e6-bf8d-26294ad519fc

Seems that for anyone with BTLs and renting themselves, if you're planning to buy in the foreseeable future it may be a good idea to move into one of your BTLs for a while to establish as your primary residence and then sell it as part of the chain.

Not much help for Nicholas and myself though :unsure:

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23 hours ago, jamesj89 said:

I assume the Stamp duty tax reclaim still applies?

Reclaim can happen as long as you sell your primary residence with the given period. However, if your primary residence is rented there's no opportunity to reclaim 

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On 7/16/2020 at 9:53 AM, richnewt said:

Thanks Nicholas, 

I also just checked with HMRC and they confirmed the same as you, 

For anyone else that comes across this thread for the same subject there's a good outline of this anomaly in this article too: https://www.ft.com/content/bb51e06e-2bd1-11e6-bf8d-26294ad519fc

Seems that for anyone with BTLs and renting themselves, if you're planning to buy in the foreseeable future it may be a good idea to move into one of your BTLs for a while to establish as your primary residence and then sell it as part of the chain.

Not much help for Nicholas and myself though :unsure:

I am kind of in the same situation, I am trying to get a BTL property as an investment but hoping that down the line I will be eligible for stamp duty exemption for my first residence property. I found online that if your BTL properties are under a limited company you should be protected as you will be separate entity. Please see below link. It would be great if someone can confirm however, 

https://propertyhub.net/forum/topic/9008-stamp-duty-surcharge-for-first-time-buyer-with-properties-through-limited-company/.

Cheers

 

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My understanding confirms that.

You will always pay the 3% surcharge on limited company purchases regardless of value.

You wont own other properties if you buy personally for the first time and therefore wont pay the 3% surcharge on your first residential

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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  • 1 month later...
On 7/16/2020 at 9:53 AM, richnewt said:

Thanks Nicholas, 

I also just checked with HMRC and they confirmed the same as you, 

For anyone else that comes across this thread for the same subject there's a good outline of this anomaly in this article too: https://www.ft.com/content/bb51e06e-2bd1-11e6-bf8d-26294ad519fc

Seems that for anyone with BTLs and renting themselves, if you're planning to buy in the foreseeable future it may be a good idea to move into one of your BTLs for a while to establish as your primary residence and then sell it as part of the chain.

Not much help for Nicholas and myself though :unsure:

Conditions of BTLs are often you can’t live there under any circumstances  [if you’ve a mortgage of course!]

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