New Stamp Duty change is looming...

[Jobbo]

LDN said:

Yes, I agree with this point but... what if I don't redesignate at the point of moving - but rather now. That's my point. How many people own property in a BTL portfolio that they have had as their home at one point? I hope you see what I mean but in any case will seek clarification.

If you read through the consultation - it has examples and is in plain English, so it's worth doing - you'll see that designating a property as a BTL is simply not part of the way it works. Have a look at section 2.8; here's an extract:

"Most individuals only have one residence at any given time. Where an individual has more than one property, in most cases it will be clear which one is the main residence. For example where an individual owns two properties, one which they live in and one which they let out.

Individuals will not be able to elect which of their residences is their main residence and therefore the treatment of a main residence for the purposes of the higher rates of SDLT may differ from the treatment for capital gains tax."

[LDN]

Jobbo said:

LDN said:

Yes, I agree with this point but... what if I don't redesignate at the point of moving - but rather now. That's my point. How many people own property in a BTL portfolio that they have had as their home at one point? I hope you see what I mean but in any case will seek clarification.

If you read through the consultation - it has examples and is in plain English, so it's worth doing - you'll see that designating a property as a BTL is simply not part of the way it works. Have a look at section 2.8; here's an extract:

"Most individuals only have one residence at any given time. Where an individual has more than one property, in most cases it will be clear which one is the main residence. For example where an individual owns two properties, one which they live in and one which they let out.

Individuals will not be able to elect which of their residences is their main residence and therefore the treatment of a main residence for the purposes of the higher rates of SDLT may differ from the treatment for capital gains tax."

Again, thanks - appreciate the posts. I've spoken with someone today who has - as a part of their BTL portfolio - two properties in which they've lived in as their main residence in the past. He's not worried at all as he says that they are indeed part of his BTL portfolio and he'll sell his main residence if he buys another... 'great' I said - I asked him 'what makes these properties that have been your main home but are now BTL - exempt from these changes (as apparently they are in as much as they'll only look at his main home being sold) - and my home that I can let out next week (and therefore becomes a BTL property to add to my others) still subject to these changes?? He didn't know and neither do I - he said that perhaps because I plan on letting it so close to the deadline; they'd have something to say - whereas if I'd done the same a year ago they wouldn't say anything; seems a pretty vague and foggy conclusion.

I agree that the general feel is that I'll be stung - but as I say; if I'd moved out my home a year ago and rented it out - that would make it a BTL property. They cannot stipulate that the only properties deemed BTL must have been bought with that intention from the very start... that seems unjust. And to clarify; it seems that you can have one hundred BTL properties - but as long as you sell your home within 18 months of buying another home; you will not get stung for the extra stamp duty (on that new home).

[Eric Mc]

One property - no SDLT 3% surcharge

2nd or more - 3% surcharge.

Can't be any simpler than that.

[LDN]

Eric Mc said:

One property - no SDLT 3% surcharge

2nd or more - 3% surcharge.

Can't be any simpler than that.

But this isn't true - it's just been on TV also... if you have BTL properties but it's your home that you are selling / and buying another then you will not pay the 3% surcharge on that purchase. The surcharge is only applied if that person chooses to keep the property that they are leaving: whether they keep it as a second home OR turn it 'at that point' into a BTL. My question is / was - what about turning said property into a BTL before the point at which one wants to move. Apologies if I'm missing something here - but I feel there's more to all of this than meets the eye. An example; someone I know has a large portfolio of BTL's - a portfolio that includes two properties that he's lived in as his main home in years gone by. He has been told 'no worries'. It's his home that he will have to sell should he buy another home. They don't care that about his portfolio or that the portfolio includes ex - 'homes'. His portfolio will not affect his future purchase of any home; he will not have to pay the extra surcharge. Do you at least get my point that; they won't accept that a home is turned into a BTL at the time of a new purchase - they will want the extra 3% - that's clear... but how can they say anything if I live in a family members home whilst I look for a new home... and the home I'm leaving it rented out... at that point it becomes a BTL and just another part of my portfolio.

Another spin on this... the home I'm leaving - I want to keep it. I could purchase a cheap flat and move into that whilst renting my old home. I could then sell this new flat that I'd then be living in - when I find the place I really want. Some may say that that's a complicated way to do things - but if the home that I really want is going to cost a lot then the stamp duty may be eye watering. My original home that I do not want to sell would now a part of my BTL portfolio - and I sell the new cheap flat I bought to live in - when I find the place I really want...

Complicated yes - but that wouldn't put me off. I'm waiting to hear back from my solicitor on this. I suspect he wants to check all the angles himself before getting back to me. Either that, or he things I'm a raving loonie; which is entirely possible.

[Eric Mc]

The legislation doesn't exist yet - so no genuine advice is really possible.

[Jobbo]

LDN said:

I agree that the general feel is that I'll be stung - but as I say; if I'd moved out my home a year ago and rented it out - that would make it a BTL property. They cannot stipulate that the only properties deemed BTL must have been bought with that intention from the very start... that seems unjust. And to clarify; it seems that you can have one hundred BTL properties - but as long as you sell your home within 18 months of buying another home; you will not get stung for the extra stamp duty (on that new home).

I really think you're listening to too much gossip and not reading the consultation paper for yourself. There is nothing about designating properties as BTL in there. It matters not whether you intend to live in it or let it out or use it as a holiday home; if you have a second property, that is subject to the 3% SDLT loading.

You've mentioned selling BTL properties too. Selling properties isn't subject to SDLT so that's a red herring. The only relief set out in the consultation is where you sell your previous main residence within 18 months of buying the new main residence. You can have let it out in the intervening period (from what I can ascertain, based on the lack of detailed legislation) but it's a question of fact as to what your main residence was on the day you bought the new main residence. Your suggestion of moving out and letting the old main residence beforehand looks wholly counterproductive.

Edited by Jobbo on Thursday 11th February 23:16

[madmover]

This will largely depend on the numbers and your relationship with the lenders. However, purchase it under the name of a limited company.
If you do go this route, just go in with your eyes wide open with regards to all the other implications.

[CornishRob]

Can someone clarify my situation if possible:

Own main house which I live in. Own with my partner.

Own 50% of another house which was left to me when my mother died. (Sister owns other 50% which we rent out)

If my partner and I sell our house we live in to move to another, will we have to pay the +3% SDLT because I own 50% of another house?

[LDN]

CornishRob said:

Can someone clarify my situation if possible:

Own main house which I live in. Own with my partner.

Own 50% of another house which was left to me when my mother died. (Sister owns other 50% which we rent out)

If my partner and I sell our house we live in to move to another, will we have to pay the +3% SDLT because I own 50% of another house?

I don't believe so. You should be fine but don't quote me. Having BTL properties doesn't seem to affect the sale / purchase of a main residence - as long as you sell your current main residence within 18 months of buying your new home.

[Muncher]

LDN said:

I don't believe so. You should be fine but don't quote me. Having BTL properties doesn't seem to affect the sale / purchase of a main residence - as long as you sell your current main residence within 18 months of buying your new home.

I don't agree, if you already own another property, the 3% rate will apply.

[ReallyReallyGood]

Muncher said:

LDN said:

I don't believe so. You should be fine but don't quote me. Having BTL properties doesn't seem to affect the sale / purchase of a main residence - as long as you sell your current main residence within 18 months of buying your new home.

I don't agree, if you already own another property, the 3% rate will apply.

Quoting Eric earlier..

If, within 18 months of buying the new property, you sell what had been your old main residence property, you will be able to reclaim the 3% surcharge.

[Casa1862]

Flow chart in the gov document seems to recognise your main residence, if you replace it then no additional stamp duty payable.

I own one BLT and one main residence, if I sell my main residence and replace with new main residence then no extra stamp duty. Chart makes that clear, yes?

http://www.telegraph.co.uk/finance/personalfinance...

[Jobbo]

Casa1862 said:

Flow chart in the gov document seems to recognise your main residence, if you replace it then no additional stamp duty payable.

I own one BLT and one main residence, if I sell my main residence and replace with new main residence then no extra stamp duty. Chart makes that clear, yes?

Only if you buy and sell on the same day. You pay the extra 3% if you keep hold of your old house, and get a refund if you sell it within 18 months.

[Shaoxter]

Casa1862 said:

I own one BLT and one main residence, if I sell my main residence and replace with new main residence then no extra stamp duty. Chart makes that clear, yes?

Correct, I don't think sandwiches count towards the number of properties you own

[LDN]

Jobbo said:

Casa1862 said:

Flow chart in the gov document seems to recognise your main residence, if you replace it then no additional stamp duty payable.

I own one BLT and one main residence, if I sell my main residence and replace with new main residence then no extra stamp duty. Chart makes that clear, yes?

Only if you buy and sell on the same day. You pay the extra 3% if you keep hold of your old house, and get a refund if you sell it within 18 months.

The flow chart backs up my own thoughts that - when does ones main residence be deemed a BTL... i.e: if it's no longer my main residence - as in - I rent it out next week... it's then no longer my main residence; I'm letting it out. And I will stay with family until I find a home for myself. I feel like what I've been saying all along is true.

[Eric Mc]

What has renting out a property got to do with any of this?

Whether the additional property is rented out or not is irrelevant. As long as the person owns more than one property AT THE SAME TIME, they will be liable to pay the extra SDLT.

[LDN]

Eric Mc said:

What has renting out a property got to do with any of this?

Whether the additional property is rented out or not is irrelevant. As long as the person owns more than one property AT THE SAME TIME, they will be liable to pay the extra SDLT.

Again, this is not true....... if you have a BTL portfolio but you sell your main residence whilst purchasing another main residence, you will not pay the extra stamp duty in that purchase. So that is why the status of a property (whether it's a main residence or a part of ones BTL portfolio) is important.

Not sure if I'm missing something or you are. Genuinely.

[Eric Mc]

LDN said:

Again, this is not true....... if you have a BTL portfolio but you sell your main residence whilst purchasing another main residence, you will not pay the extra stamp duty in that purchase. So that is why the status of a property (whether it's a main residence or a part of ones BTL portfolio) is important.

Not sure if I'm missing something or you are. Genuinely.

You are trying to make it more complicated than it is.

However, you MAY end up being correct because the legislation does not yet exist - so nothing is ruled out. I wouldn't be surprised if all sorts of complicated exemptions will need to be introduced to cover all the possible permutations.

[Jobbo]

LDN said:

The flow chart backs up my own thoughts that - when does ones main residence be deemed a BTL... i.e: if it's no longer my main residence - as in - I rent it out next week... it's then no longer my main residence; I'm letting it out. And I will stay with family until I find a home for myself. I feel like what I've been saying all along is true.

I am still not sure what you're getting at. If you move out of your current main residence and let it out now, before you buy anything else, then it's no longer your main residence. You then buy a new main residence; follow the flow chart and you aren't replacing a main residence, so you pay the 3% loading. You can't even sell the original house within 18 months to get a refund because it wasn't your main residence on the day of completion of the purchase. You pay the 3% loading and have no way of ever claiming it back.

If you're intending to sell the original property, make sure it is unarguably your main residence on the date you buy the new one. Based on what we currently know (which as Eric sensibly states, is likely to change), you could then rent it out for a year or so before you sell it within the 18 months, reclaiming the extra 3% SDLT you'd paid on the purchase of your new main residence.

[Kermit power]

Jobbo said:

Not relevant - if you own two or more properties at the end of the day of purchase, you pay the extra 3% SDLT on the purchase. If you then sell your old main residence within 18 months, at that point you get the refund. It's a multiple property tax, not just a BTL tax.

Why should people who decide to move while keeping their existing house and turning it into a letting property get a better deal than those who stay in the same house and buy an additional property as a BTL? It would be an obvious loophole.

ETA: interrupted while typing, but Eric and I are saying exactly the same thing.

I would agree that the OP shouldn't be better off than someone staying in the same house and buying a BTL, but in this case, surely he's going to be - assuming he's moving to a larger property - a lot worse off?

Let's assume you're living in a nice 5-bed detached house and decide to buy a 2 bed terrace as a BTL. You'd pay the extra stamp duty on the BTL, which I think is fair enough.

But if you're already living in a 2 bed terrace, and decide to buy a 5 bed detached and rent out the 2 bed terrace, you'd end up paying the extra stamp duty on the new property, even though you're renting out the old one. You're pay far, far more than the chap in scenario 1 to be in exactly the same position in terms of property portfolios.

Surely that's unfair on the OP and people like him?