AIBU to think conveyancer wrong about Stamp Duty?

The advice you have been given is correct. The only exception to the second home stamp duty rules is if you already own two houses and you are selling your main residence for another main residence. You and your partner both own one house each and when you buy a new one jointly you will each own two houses, unless you sell the original ones within the time limit. So sell your current houses before buying.

This thread is so confusing. I thought second home stamp duty applied to ANY second home you buy, regardless of whether you live in it or not.

For example, my partner and I live separately and we're going to sell both our houses and move into one to live in together. I've been told that if one of our houses doesn't sell by the time we complete on the new house, then we will pay second home stamp duty because one of us will own two homes, even though we will be living in only one of them. We can then claim this stamp duty back if we sell the old home within three years.

So I'm very confused.

As another poster pointed out there'll be more to be inherited as his parents won't have to pay for care home fees will they? They've protected the house to save care home fees so their care will be funded by tax payers. That 'bad hand' he's been dealt was a savvy hand when it came to securing himself an inheritance. You could view the higher rate as the cost of having that future security.

We had to pay the higher rate of stamp duty when we moved into a new main residence, but couldn’t sell our old house. So for six months that house was unlived in and untouched, but we still had to pay double stamp duty and full council tax on both, which was mind boggling to me.

We did get a stand duty refund when it eventually sold though.

And also https://wealthandtax.co.uk/can-you-gift-your-house-to-your-children-and-avoid-inheritance-tax/

Remaining in the Property After Gifting
Yes, you can continue to live in the property after gifting it to your children, but you must:

• Pay Market Rent: You need to pay rent at a rate comparable to local rental properties.
• Cover Bills: You must also pay for utilities and other bills associated with the property.

.

DH co-owns a share in a property, that’s what I meant by we don’t actually own another property.

if you are intending to keep your current property and rent it out you could set up a limited company, sell the property to the company, and the company then rents it out

but there are complexities in tax, directors loans, company accounts and you need proper advice from a well qualified financial and tax advisor.

She owns one property
She is not replacing it
She will then own two properties

She currently has one property. The one she lives in is not owned by her (owned by her partner) and not owned by her spouse (because they’re not married). So for stamp duty purposes it’s not her main residence.

You literally said yo own other property so can't then say you down own other property

OP it sounds like 1) you don’t own the house you currently live in, your partner does and 2) you’re currently not married.

Assuming those things are true, yes you will have to pay. The confusion comes from the exemption for replacing your main residence. If you own two houses, live in one and rent one out, and you’re simply selling the one you live in to buy another, then yes you only pay the standard rate. Most of the posters on this thread who have said “well I have two houses and I only paid the standard rate” are in this category.

But you are not. You currently own one flat. You live in a house which you do not own. The HMRC guidance link provided above makes clear that if you live in a house which neither you nor your spouse own then it’s not your “main residence” for stamp duty purposes. Your flat is, because that’s the only property you own.

The transaction you intend to pursue will result in you going from owning one property to owning two. That’s exactly the kind of behaviour which the rules are intended to discourage. Therefore you will have to pay the higher rate.

You can avoid this by selling your current property within three years of buying the new one. You might be able to avoid it by marrying your partner before selling the old house. That would make it your main residence (because you live in it and your spouse owns it) for stamp duty purposes, so the “main home” exemption should apply.

There’s a list here about what may contribute to your partner’s house being your main residence:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812

Id go through this then I’d get clarification from HMRC what property counts as your main residency. I’d also ring your solictor and discuss rather than email so he can’t ignore your questions as I think they’re valid.

I think a lot of people think it’s a simple if you have more than one property situation but it’s a little more nuanced than that, you are allowed to replace your main residence and only pay the lower rate of stamp duty.

agreed.

I think DH (and myself) would be better of if he didn’t have a share in the property since it’s cost us a lot more in the long run with stamp duty. And while he would have inherited on their passing, it wouldn’t have been close to the threshold to where he would have to pay inheritance tax so he (and I) would have been better off this way.

But DH parents did act on bad advice, but unfortunately it’s their children who are having to pay additional tax if and when they sell and buy properties just so the parents could potentially avoid care costs (which would affect the inheritance I suppose but no where near the first extra amount of stamp duty being paid by the 4 children!)

Wow. So the parents did this to avoid care costs. I have no sympathy. Why shouldn't people pay for the cost of their care or sell their assets to pay for it?

Adding to this… I know two people who didn’t declare homes abroad and were fined by HMRC… so fuck about to find out really. There is a 6 year threshold (I know this as one of these people consulted a very expensive lawyer) for HRMC clawing back the higher rate SD.

You only own 1 property, therefore when you buy another with your partner you are replacing your ‘main residence’ surely? It doesn’t matter that you rent it out or not as it is your only property so it must currently be your main one. Your partner selling his house isn’t relevant nor is whether your are married.

DH parents were given bad advice unfortunately. They did this (which is really frowned upon!) to avoid any future care costs (which obviously would affect what their children would have inherited anyway).

But inheritance tax won’t be avoided as the property, whilst worth over the £325k threshold, isn’t work much more over. And there is 4 of them, so if children are inheriting they have a personal threshold of £175k each and they wouldn’t reach this as the property is between 4 of them.

It doesn't matter who owns what as they are buying as a single unit.
The main thing is clarifying your 'main residence'

I bought with my boyfriend at the time (now husband) I had moved in with him and was on council tax there, having let out my own place.

When we bought a joint after selling his no additional SDLT as that was my main residence.

I suppose you could argue the place down south is your 2nd residence.
HMRC will look at main residence where you have all your bills/doctors/council tax/registered to vote etc.

Good grief. Yes it's really awful to have interests in more than one property that mean 1. you hold greater assets than other people and 2. have greater tax liabilities due to having more assets.

In the case of the poster whose husband owns a share of his parent's house, this is probably to avoid inheritance tax when the parents die. The consequence is higher stamp duty liability for the husband, which presumably is less than the potential inheritance tax deducted from his parents' estates would be.

It's not awful unless really bad advice was given at the time he chose to take a share in the house. They've made that choice. Ffs - the entitlement of some people who have so much more than very many others.

So It’s all to do with what your main residency is and what the definition of legal residency is for stamp duty purposes. I don’t know how this is defined but I’d look it up and work out what your situation is defined as.

OP will be increasing the amount of properties owned though. Yes of course they have 2 now, but I assume these were purchased separately and before they were together (?) and they didn’t have interest in each others properties, however, even though her partner is selling his and the new property will replace this main residence of theirs, OP has interest in another property that is in her name, regardless of who is living there.

You need to find out if being married or not if the important point.

Here they are:

I think this answers the question!

images below because they didn’t upload!