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Please can someone advise- am I right in my understanding of the new stamp duty arrangements?

(14 Posts)
Howaboutthisone Thu 10-Mar-16 15:35:29

With the new stamp duty rules, are we right in thinking that if we change our existing property to a consent to let, then buy a new house to live in, the new rules wouldn't apply and we would just pay 2.5% of the purchase price over 125,000?

Lonecatwithkitten Thu 10-Mar-16 15:45:11

As I understand it if you are not selling your original property you are subject to the new stamp duty rates under 125K this is 3%. The only way round this is a limited company set up. The only leeway appears to be if you sell the old property with in 18 months.
I have looked into it quite a bit as my H and I are divorcing he was supposed to take my name off a property 4 years ago. Even though I have no access to the property so if he does not resolve this by 16th May I will have to pay 'investors rate' on my new home.

emwithme Thu 10-Mar-16 15:51:06

No, you'll have to pay the 3% extra - see the flow chart attached.

Howaboutthisone Thu 10-Mar-16 15:56:42

Ah bugger! Thanks for that even though it wasn't what I wanted to hear. Our financial adviser seemed to think that if we changed our property to consent to let we'd be ok. But he was also calculating stamp duty on whole purchase price either way instead of amount over 125,000 which made me wonder.
Where is the image from if you don't mind me asking? So that I can refer him to it.

emwithme Thu 10-Mar-16 16:14:02

Image is from the consultation document here

You'd pay 3% on the whole amount PLUS whatever the normal amount was. For example, if it was a £200,000 purchase you'd pay the normal 2% on the amount between £125,000 and £200,000 (£1,500) plus 3% on the whole lot (£6,000) making a total £7,500.

Howaboutthisone Thu 10-Mar-16 16:21:23

Thank you for that. So he's right. I was hoping he wasn't but better to know.

lalalonglegs Thu 10-Mar-16 16:32:12

Also, bear in mind if you choose to put your original property into a limited company, you would have to pay stamp duty on that transaction anyway so might not end up saving anything.

specialsubject Thu 10-Mar-16 17:03:43

the 3% also begins from zero.

remember you are about to become a bastard landlord, the root cause of all the country's problems. You are going to be very rich and make your tenants live in filth and squalor, evicting them on a whim and jacking up the rent whenever you feel like it. You certainly can't have worked to get the house, it was given to you by the fairies. You should really let your tenants live in it for free, because it is evil to get money from a human need. So don't go complaining about a bit of extra cash from your millions, serves you right.

at least that's what much of MN thinks....and so do many others with the sense of a sheep.

see you on landlordzone...

(and yes I'm a landlord, and yes this is a rant, and no none of it is true!!)

HereIAm20 Thu 10-Mar-16 17:42:51

specialsubject - this made me laugh out loud. I can't just type lol - because that too would be very very wrong on MN

Howaboutthisone Thu 10-Mar-16 18:38:20

That made me chuckle!

TattyCat Thu 10-Mar-16 19:51:01

Similar situation here - we're buying a cottage to renovate so staying in our current home whilst doing that. We are paying somewhere in the region of £8k stamp duty but c.£6k will be refunded IF we sell our current home within 18 months. We already have 'consent to let' from our mortgage company on our current home (we just explored options) - as they don't offer a 'buy to let' mortgage it's just a straightforward agreement that we can rent it out if we wish. It matters not how they have agreed - we still have to pay the additional stamp duty.

I guess they are putting the 18 month refund in place for those people who are renovating so need some time, but punishing those who own more than one property. Still... it's worth keeping both if house prices continue to rise as they have been as we can make more than £6k over time.

Howaboutthisone Thu 10-Mar-16 21:55:45

That's a good point. It's just finding the extra in the first place that's not great. Plus, we're only thinking about buying 'a second property' because we've had ours on the market, it's not moving and we don't want to miss out on the house we're desperate to buy. In an ideal world we'd sell up and buy. Reality is that that means we could be waiting too long and lose the house we want as our home.

TattyCat Fri 11-Mar-16 10:41:31

OK, in that case, you're not intending to own two properties forever (or for a substantial amount of time) so I'd go for the one you want if you can afford both for a period and make sure you sell your current property within 18 months to get that refund.

But - this isn't set in stone yet. I believe the 25th March is the date to keep an eye on. I doubt it'll change, but it could...

Howaboutthisone Fri 11-Mar-16 19:16:35

Thanks tattycat. We'll see what the budget brings I suppose.

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