Stamp duty query

[Pocster]

Hey all

 

slightly off topic for the forum but thought I’d ask .

if I buy a btl mortgage and pay the increased stamp duty ; live in it I.e never rent it ; sell it at a later date ; can I get a refund on the excess stamp duty paid ?

 

cheers 

[ProDave]

I think the simple answer is no. It's not a "buy to let" tax, but a "second home" tax. You would have a second home and it is irelevant what you do with it.

 

There is a mechanism that if you sell your existing home within a certain period you can get it refunded, that is to cover the situation of buying a new main residence before you sell the old main residence.  Whether that would cover your situation I am not sure.

[Pocster]

1 minute ago, ProDave said:

I think the simple answer is no. It's not a "buy to let" tax, but a "second home" tax. You would have a second home and it is irelevant what you do with it.

 

There is a mechanism that if you sell your existing home within a certain period you can get it refunded, that is to cover the situation of buying a new main residence before you sell the old main residence.  Whether that would cover your situation I am not sure.

Bum 

it’s not a 2nd home though if I’m living in it now ....... ?

[ProDave]

So what is your first home doing at the moment then?

[Pocster]

1 minute ago, ProDave said:

So what is your first home doing at the moment then?

Lol

i don’t have one ; I sold it !

[Oz07]

Entitled to refund then have you consulted your conveyancer? Think time limit is 18 months or more

[Pocster]

2 minutes ago, Oz07 said:

Entitled to refund then have you consulted your conveyancer? Think time limit is 18 months or more

I guess I need to change the question ; so let’s pretend ...

 

i buy a property with btl and higher stamp duty .

 

cant rent it for various reasons 

 

decide to live in it 

 

eligible for stamp duty partial refund ?

who does this ? Me I guess not my accountant???

 

cheers 

 

p.s if only life was simple :-)

[Oz07]

If it's less than the specified period between purchase and sale of first house your good to go. Plans change as you've found out. The way you've financed doesn't exclude you. 

[Oz07]

You do it. I'd imagine just a form with some evidence. Hmrc website 

[Pocster]

5 minutes ago, Oz07 said:

You do it. I'd imagine just a form with some evidence. Hmrc website 

Cheers !

 

a couple of k back would be nice ! 

[ProDave]

23 minutes ago, pocster said:

Lol

i don’t have one ; I sold it !

So whatever house you buy now will be your FIRST house, regardless of what you use it for, so standard stamp duty applies.

[Pocster]

3 minutes ago, ProDave said:

So whatever house you buy now will be your FIRST house, regardless of what you use it for, so standard stamp duty applies.

Ace :-)

 

 

Edited January 7, 2018 by pocster

[ProDave]

3 minutes ago, pocster said:

Ace :-)

 

 

EXCEPT if you did buy this as a BTL and just pay standard stamp duty, then you later buy a more expensive property to live in, you would then pay the extra stamp duty on your main residence.

 

[vivienz]

+1 of ProDave's comments.  We completed on the site of our newbuild nearly a year ago but had to pay the higher SDLT because we still had our main home.  We have 3 years from when we completed on the site to get the new place built and the current one sold in order to claim back the difference on the SDLT.

[PeterW]

@vivienz Ok that’s weird as we bought a plot with planning and it was classed as “residential” for conversion purposes (big double garage) but paid no stamp duty as the solicitor said we didn’t need to and HMRC accepted it despite us owning another property....

[vivienz]

Just now, PeterW said:

@vivienz Ok that’s weird as we bought a plot with planning and it was classed as “residential” for conversion purposes (big double garage) but paid no stamp duty as the solicitor said we didn’t need to and HMRC accepted it despite us owning another property....

 

Our plot has an existing dwelling on it that we will demolish, hence the stamp duty as it is classed as a second property.  If there is no existing dwelling, then the higher SDLT won't apply which, I guess, is the case for you.  We just have to make sure we meet that deadline!

[PeterW]

Well the garage was part of an existing dwelling which meant unless we demolished all but two walls we couldn’t reclaim the VAT as it’s a conversion. So I’m not sure how we should have been treated but I’m not complaining .....

[vivienz]

I certainly wouldn't! Three years seemed like a long time at the start, but 1/3 of the way through it with no change to see, things become a little more urgent.

[Ferdinand]

Were it to end up outside the reclaim period you could offset the expenses of purchasing the second house against the cgt you pay on the huge price increase you will make because you chose it so skilfully .

 

Expenses of purchasing includes stamp duty.

 

I think.

 

Edited January 7, 2018 by Ferdinand

[Oz07]

5 minutes ago, Ferdinand said:

Were it to end up outside the reclaim period you could offset the expenses of purchasing the second house against the cgt you pay on the huge price increase you will make because you chose it so skilfully .

 

Expenses of purchasing includes cgt.

 

I think.

 

Really?! Sdlt can be used against profit. Surely not

[Ferdinand]

29 minutes ago, Oz07 said:

Really?! Sdlt can be used against profit. Surely not

 

 

See eg 2nd last para here https://www.primelocation.com/discover/buying/guide-to-the-3-stamp-duty-surcharge/#7KgouIrTHFQLRVp4.97.

 

and here

 

Quote

And, while it's not an exemption, it's worth noting that if you pay Capital Gains Tax on the sale profits of an additional home, you can offset the cost of the 3% Stamp Duty surcharge against your gain.
Read more at https://www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/#vBRuoGbJSJLVUW5K.99

 

Check with your accountant or the HMRC, but that is what they say.

 

As we know it is *freaking* complicated.

 

F

Edited January 7, 2018 by Ferdinand

[Jml]

Can be used to offset CGT, but CGT rate 18 or 28 % of profit, so only recovering 18 or 28% of SDLT rather than 100% if sell within 3 year period.

 

[ProDave]

If your new build is not ready by the deadline, it might still be worth selling and moving into rented just to get the sdlt refunded. As long as the sdlt refund more than covers the rental so you don't want to be doing that for long.

 

If the previous house was your main residence, there should be no CGT to worry about.

[vivienz]

@ProDave - that could be worth thinking about as the excess is in the region of £7k.  The previous house is, indeed, our main residence.  It's a double-edged sword really, isn't it?  We're lucky enough that we can work our finances around and remain in our current house whilst the new one is being built, but £7k at risk if we go beyond the 3 year point after purchase.

 

@Ferdinand - I hope that it will never come to an offset situation with CGT as we plan that this will be the last house for us.  One never knows, however, so I shall make a note of it somewhere safe as it's quite possible I will not have enough memory to retain a detail like that if circumstances dictate that we have to leave.

 

I will put a post into the mortgages and funding section shortly with details of the method that OH and I are using.  It may not be widely applicable, but someone may find it useful.

[Ferdinand]

42 minutes ago, vivienz said:

@ProDave - that could be worth thinking about as the excess is in the region of £7k.  The previous house is, indeed, our main residence.  It's a double-edged sword really, isn't it?  We're lucky enough that we can work our finances around and remain in our current house whilst the new one is being built, but £7k at risk if we go beyond the 3 year point after purchase.

 

@Ferdinand - I hope that it will never come to an offset situation with CGT as we plan that this will be the last house for us.  One never knows, however, so I shall make a note of it somewhere safe as it's quite possible I will not have enough memory to retain a detail like that if circumstances dictate that we have to leave.

 

I will put a post into the mortgages and funding section shortly with details of the method that OH and I are using.  It may not be widely applicable, but someone may find it useful.

 

As ever with selfbuild ... do the homework and map out the elephant traps, with professional advice where necessary.

 

Of course, you may end up selling for reasons you do not know about, or dispose to kids if you need to end up living somewhere else, or a CGT liability may attach to a future sale depending on what happens, so keep the records anyway.

 

Best of luck.

 

F

Edited January 8, 2018 by Ferdinand