Stamp duty on 2nd home?

[GT4P]

So not wanting to do an Angela Rayner I am buying a property which will become our main residence which will complete before the sale of our current property which is up for sale. The new property will become our main residence. I do know I have to pay the higher refundable stamp duty on the new property with the refund paid on the sale of existing property, but is there anyway to pay the second home Stamp duty on the current address ( it’s cheaper)and pay the normal on the new property on completion as this will be our main home. And how would you go about it without paying some one to do this, yes the solicitor will be doing the ST return on completion of new property.

[Jaska]

Wouldn't you end up in the same position after the refund?

But I doubt that's possible without being some sort of Cayman islands tax dodge or being an MP

[Mr Pointy]

GT4P said:

So not wanting to do an Angela Rayner I am buying a property which will become our main residence which will complete before the sale of our current property which is up for sale. The new property will become our main residence. I do know I have to pay the higher refundable stamp duty on the new property with the refund paid on the sale of existing property, but is there anyway to pay the second home Stamp duty on the current address ( it s cheaper)and pay the normal on the new property on completion as this will be our main home. And how would you go about it without paying some one to do this, yes the solicitor will be doing the ST return on completion of new property.

Why would there be any SD on the value of your current home - you already own it & presuamably paid SD when you bought it?

[Plus4Four#]

https://www.gov.uk/stamp-duty-land-tax/residential...

[GT4P]

Current property which is our main residence we have had 2.5 years which we are selling.
New property we complete early June which will become our new main residence but because we have not sold our property the high SD will be due on new property. What I was trying to get at was can I class current property as second home at point of completion on new property thus paying higher SD on current property and normal SD on new property.
But also will the 3 year refund rule apply at point of purchase or at point of change of use

[MyM2006]

Can't see how that would be allowed, if it was then if I wanted to buy a 5 million pound home for example I'd go out and buy a house for 100K, pay the 5% stamp duty second home surcharge on that which would free up my cashflow.

[GT4P]

[quote=Plus4Four#]https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

[/quote]

I think this wording from the site clarifies:

“You pay SDLT at these rates if, after buying the property, it is the only residential property you own. You usually pay 5% on top of these rates if you own another residential property. “

I suppose a way round it is you buy one property in your wife s name and one in your own and do what so many on benefits do with state paid rental property and say your separated lol

Edited by GT4P on Wednesday 1st April 11:23

Edited by GT4P on Wednesday 1st April 11:24

[dave123456]

I just reclaimed it once I sold my previous principal residence. There is a cash flow impact but it will all come out in the wash.

[GT4P]

dave123456 said:

I just reclaimed it once I sold my previous principal residence. There is a cash flow impact but it will all come out in the wash.

Yes I have done this a few times before, just trying to see if there was a work around to avoid cash flow impact although last time I did this they did pay interest on the 2nd property tax refund

[dave123456]

GT4P said:

dave123456 said:

I just reclaimed it once I sold my previous principal residence. There is a cash flow impact but it will all come out in the wash.

Yes I have done this a few times before, just trying to see if there was a work around to avoid cash flow impact although last time I did this they did pay interest on the 2nd property tax refund

If there is a workaround it would be bloody hard to orchestrate. Administratively fiddly and requiring your conveyancer to play ball.

[TA14]

dave123456 said:

GT4P said:

dave123456 said:

I just reclaimed it once I sold my previous principal residence. There is a cash flow impact but it will all come out in the wash.

Yes I have done this a few times before, just trying to see if there was a work around to avoid cash flow impact although last time I did this they did pay interest on the 2nd property tax refund

If there is a workaround it would be bloody hard to orchestrate. Administratively fiddly and requiring your conveyancer to play ball.

You could argue that Rayner has shown that if you only pay the lower rate, it will take them a couple of years before you have to pay the difference and you should hopefully have sold your house by then. Or is that just for AR?

[crisp packet]

As you will still own your existing property when you purchase your new property, you will need to pay the higher rate.

If you are 'replacing your main residence' you can claim a refund of the higher rate sum. Yoiu will need to complete the sale of your existing home within 3 years of your purchase to do this.

I don't know what you mean by 'classing' your existing home as being something else. You won't pay stamp duty on your existing home as you're not buying it. Incidentally if your existing property wasn't your home and was, say, a rental, then even if you then sell it within 3 years of your purchase you couldn't then reclaim the higher rate duty as you won't have 'replaced your main residence'.

If you don't own your existing home at the time of the purchase of your new home then you won't have the higher rate to pay but that comes with problems. You would have to sell or gift your existing home to someone else. A transfer to a spouse with the other spouse buying the new home doesn't work. You'd still have the higher rate to pay by virtue of being married.

If you have a mortgage on the existing house that would have to be repaid when the house if sold or gifted. If the buyer is getting a new mortgage for the same sum to repay the existing mortgage then that becomes the 'consideration' plus any actual purchase price paid for stamp duty purposes and if that person owns another house, they then pay the higher rate (which kicks in from just £40,000). If it the property isn't to be a home for the person acquiring it then if this is obtained for below marlet price they will have capital gains tax to pay when they sell or corporation tax on this profit if they're a company.

If there was an easy way around this everyone would do it and not pay the higher rate stamp duty.

Just be a bit careful you're not stretching yourself too far in buying before you sell. You might be convinced your existing house will sell quickly but it might not. The national average period of time to get to exchange is apparently 4 months. It could take months to find a buyer, months for the conveyancing and then could fall through leaving you back to square one. Be very sure you have cashflow or other back ups to be able to potentailly cope with difficulties that might arise on resale. You could have the property and any related bills for much longer than you expected.

[Jobbo]

GT4P said:

I think this wording from the site clarifies:

You pay SDLT at these rates if, after buying the property, it is the only residential property you own. You usually pay 5% on top of these rates if you own another residential property.

I suppose a way round it is you buy one property in your wife s name and one in your own and do what so many on benefits do with state paid rental property and say your separated lol

That dodge with buying in your wife's name isn't going to work either - you're considered together when buying property, so if you want two properties buy one in each name before getting married.

There's only one transaction subject to SDLT here and that is your purchase of the new property. There's no way round it unless you lie on the SDLT return (not a good idea); HMRC do repay fairly quickly once you sell and claim the refund.

[GT4P]

Fully understand all implications and 3 year rule as it s not my first rodeo buying a property whilst owning another property , HMRC do pay out quickly with interest.
The government website quote I posted makes it clear on the rules.
Was just wondering if there was another way, clearly not, or play dumb buying new home as main residence and paying lower SDLT then see what happens lol.
My solicitors filled out the SDLT form as main residence on new property until I corrected them, they were aware of my situation, maybe that s what happened to AR?

[Jobbo]

GT4P said:

Fully understand all implications and 3 year rule as it s not my first rodeo buying a property whilst owning another property , HMRC do pay out quickly with interest.
The government website quote I posted makes it clear on the rules.
Was just wondering if there was another way, clearly not, or play dumb buying new home as main residence and paying lower SDLT then see what happens lol.
My solicitors filled out the SDLT form as main residence on new property until I corrected them, they were aware of my situation, maybe that s what happened to AR?

To be fair, if you've been there and done that before you knew the answer before you posted

If you played dumb to see what happens, HMRC have 21 years to come after you and charge more interest than they pay, plus penalties equal to the original duty avoided. Since it's a self-assessment tax it's entirely down to you to get it right. But you knew that.