Confused about new Stamp Duty & BTL
Discussion
We currently own a 1 bed flat worth circa £250k, but are looking to buy a 3/4 bed family house for circa £475k.
Originally, we had planned to keep the current £250k flat and rent it out as a BTL, BUT, it seems that due to the new 3% ruling, we would now have to pay an extra 3% on the £475k (£14,250) - rather a lot of money obviously.
With that in mind, is it right that financially at least, would we be better off selling the £250k flat, buying the £475k house, & then buying another £250k flat 6 months later, subsequently paying the 3% (£7500) on that lower amount?
Seems like a slightly crazy way of doing things?
Originally, we had planned to keep the current £250k flat and rent it out as a BTL, BUT, it seems that due to the new 3% ruling, we would now have to pay an extra 3% on the £475k (£14,250) - rather a lot of money obviously.
With that in mind, is it right that financially at least, would we be better off selling the £250k flat, buying the £475k house, & then buying another £250k flat 6 months later, subsequently paying the 3% (£7500) on that lower amount?
Seems like a slightly crazy way of doing things?
Unless I'm missing something, sounds right.
Two points - you have 36 months to sell your main residence and claim back the enhanced rate so I suppose you could do a short term rental but not ideal.
Secondly, you maths is incorrect as the 3% is on top of the normal rate. So £10,000 on the £250k or £28,000 on the £475k property.
Two points - you have 36 months to sell your main residence and claim back the enhanced rate so I suppose you could do a short term rental but not ideal.
Secondly, you maths is incorrect as the 3% is on top of the normal rate. So £10,000 on the £250k or £28,000 on the £475k property.
Jockman said:
Unless I'm missing something, sounds right.
Two points - you have 36 months to sell your main residence and claim back the enhanced rate so I suppose you could do a short term rental but not ideal.
Secondly, you maths is incorrect as the 3% is on top of the normal rate. So £10,000 on the £250k or £28,000 on the £475k property.
Sorry, yes, i meant an extra 3% on top of what we'd already have to pay. £13,750 of stamp duty on the new house is bad enough (my fiance is saving for this part), but the extra £14,250 just isn't possible really. Well it is, but it would mean far less deposit being put in the pot (which i will be paying). Two points - you have 36 months to sell your main residence and claim back the enhanced rate so I suppose you could do a short term rental but not ideal.
Secondly, you maths is incorrect as the 3% is on top of the normal rate. So £10,000 on the £250k or £28,000 on the £475k property.
I guess i should start a pension instead of having a BTL then.
Sir_Dave said:
We currently own a 1 bed flat worth circa £250k, but are looking to buy a 3/4 bed family house for circa £475k.
Originally, we had planned to keep the current £250k flat and rent it out as a BTL, BUT, it seems that due to the new 3% ruling, we would now have to pay an extra 3% on the £475k (£14,250) - rather a lot of money obviously.
With that in mind, is it right that financially at least, would we be better off selling the £250k flat, buying the £475k house, & then buying another £250k flat 6 months later, subsequently paying the 3% (£7500) on that lower amount?
Seems like a slightly crazy way of doing things?
It would appear so. Though are are other costs involved in buying and selling. Agency fees, conveyancing etc..Originally, we had planned to keep the current £250k flat and rent it out as a BTL, BUT, it seems that due to the new 3% ruling, we would now have to pay an extra 3% on the £475k (£14,250) - rather a lot of money obviously.
With that in mind, is it right that financially at least, would we be better off selling the £250k flat, buying the £475k house, & then buying another £250k flat 6 months later, subsequently paying the 3% (£7500) on that lower amount?
Seems like a slightly crazy way of doing things?
I recommend keeping the btl and get top rent to offset the stamp duty.
Prizam said:
This is my understanding of it. And makes me sick!
Work hard, save money, try to invest wisley to look after your own future... get penalized.
Not exactly correct is it? Work hard, save money, try to invest wisley to look after your own future... get penalized.
Are you saying that it is right that residential property should be commoditised into an investment class? We already have swathes of hard working people who can no longer afford to buy a home because of investment and speculation money driving values too high.
No one is stopping you from putting your hard earned savings into actual investment assets that don't have a negative impact on the whole of society.
OP, you're only issue with selling and repurchasing a flat might lie with LTV rates. It looks like BTLs, under the new stress test guidelines, are going to need suitable deposit margins to try and remove the systemic risk of all the badly financed investments that are held on too low a margin.
Rangeroverover said:
as you aren't married is there any chance you could own one property each. Can you finance the new house solo on your income, can she finance the current one on her salary??
Yes, that seems a natural question. Wouldn't be a bad idea to get an accountant to look at the whole situation.Ozzie Osmond said:
Rangeroverover said:
as you aren't married is there any chance you could own one property each. Can you finance the new house solo on your income, can she finance the current one on her salary??
Yes, that seems a natural question. Wouldn't be a bad idea to get an accountant to look at the whole situation.Gassing Station | Finance | Top of Page | What's New | My Stuff