Stamp duty if you have a BTL and want to move main residence

[Artinsurance]

Can any solicitors confirm what our position would be:

Partner and I own a home without a mortgage as Tenants in Common on a 50:50 basis

Partner inherited another property after we moved to our home which he rents out (it's not mortgaged but I've said BTL for convenience). It is worth less than £250k

We are looking to move house (without a mortgage) to a home in the band between £250k and £925k

Hopefully one of you may be able to confirm whether we have to pay the higher rate of Stamp Duty on our new main residence:

1. If we buy and sell at the same point (I think we won't pay the higher rate in this case)
2. If we buy a new house and sell our current home at a later point (I believe we may apply for a refund if we do this within 3 years)
3. If we sell our current home and move into a rental property till we find a new house to buy (No idea!)
4. If we sell our current home and move into the other property that my partner owns till we find a new house to buy then we rent out the other property again (No idea!)

We're not married but if we were, would that change the position?

If your partner retains ownership of the inherited property and then buys another with you ( even if you sell the existing property first ) and his name is on the deeds he will be counted as a second home owner so you will be liable for the higher stamp duty. Marriage doesn’t change the position. You would only be able to apply for the refund as per your point 2 if your partner didn’t have the inherited property. The £250k limit is irrelevant if you own two properties. My DS has recently ended up in a similar position and had to pay the higher stamp duty.

Has the rule changed on this then? Because as far as I was aware you just pay the normal rate on your main residence. As long as your partner has designated the house he lives in as his main residence, he shouldn't be liable for the higher rate? This was certainly the case when I moved house seven years ago.

I’m sorry to be chippy but you will get both good and bad advice on here and you won’t know which is which. Pay for a solicitor.

Look at the “higher rates for additional properties” here - should explain most of it

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

That's for capital gains tax as far as I am aware not for stamp duty.

Fair comment. I'd hoped it would be a really easy answer 🙂

We'd read the .gov pages but we had different interpretations about what it would mean in our case (especially as I'm not sure we will definitely find something to buy to move into immediately) @BlueyNeedsToFuckOff

Pretty sure you don’t pay the higher rate if you’re replacing your main residence. I remember looking into it a number of years ago when we were potentially going to be in a similar situation. But if you don’t sell your original main residence immediately then you’ll have to pay the higher rate and get it refunded when you do sell (which must be within 3 years)

Definitely get your own legal advice. But my understanding is that you are correct on your first two points, on your third point as long as you buy a new main residence within 36 months you won’t have to pay the higher rates. I’m not going to comment on your fourth point as you definitely need to ask a lawyer on that one.

I am not a lawyer, but have some experience in this area - but never believe what you read on MN without checking with your own professional advisers!

If it’s sold at a later point you pay the higher rate and then reclaim. But I’m fairly sure it’s shorter than 3 years. I think it’s 2 but it’s certainly not as long as 3. Or I would have been able to reclaim my £12k that I lost after bad advice from a solicitor.

You're bang on!

Go and pay for proper legal advice.

It is 3 years - it’s pretty clear on the gov.uk website, 36 months

No, it was definitely stamp duty. Moving from one main residence to another at the same time does not attract the higher rate. Points 1 and 2 from the OP are clear. 3 and 4 less so.

Sorry it’s sell within 3 years, reclaim within 12 months. We were told to reclaim within 2 years but it’s only 1.

As it happens, we've got another house sale going through at the moment so I'll ask when that's completed. The only reason I didn't is a) that this is just a theoretical discussion we're having about moving and I hoped it was a really obvious answer since it must happen to a lot of people and b) I didn't want to send my solicitor off on a tangent when I'm wanting her to focus on getting the contracts exchanged.

Although legal advice can also be wrong as in your case @Cutleryclaire

Here's my understanding:

1. Buy and sell main residence on the same day - this is a replacement of main residence and so the surcharge would not apply.
2. Buy new main residence and sell old main residence later - you would pay the surcharge at the point of purchase but can claim a refund if, as you say, you sell the old main residence within 3 years AND you start the claim within 12 months of that sale.
3. If you move into the rental property then this becomes your main residence. Whether you pay the surcharge depends now on whether you sell the (rental) property when you make your next purchase. If I understand your option 3 to mean you would sell the rental property then at the point of purchase you would only own one property (the new one that you'd be looking to move into) so the surcharge wouldn't apply.
4. If you move into the rental property, and then go on to buy a new property while retaining the rental, then you would be charged the surcharge (as you would own two properties - the new one and the rental) and there would be no opportunity to claim a refund as you wouldn't be replacing your main residence.

I am no expert! But we have rental properties so I have previously looked in to this and this was what I believed to be true. It does mean that if you want to keep the rental property then it is best to avoid moving into it as an interim step, as doing so will incur the additional charge on your new property purchase.

1. Replacing main residence so normal rate stamp duty will apply
2. Higher rate stamp duty will apply but can claim a refund if you sell main residence within 3 years.
3. Normal rate stamp duty would apply provided you replace your main residence within 3 years.
4. Higher rate stamp duty would technically apply.

Not being married means you could sell your property, move into the rental and buy the new property on your own. Your partner would not be able to be on the deeds for the stamp duty relief. If you are married, it makes no difference as his assets are also seen as yours.

Thanks for this, although my point 3 was meaning move into an entirely different rental property that we don't own - so your research kind of answers that that might be a better option than moving into the one that my partner owns (apart from the fact that finding one that would accept our pets might be a challenge 🙁)

I had wondered about whether it could be done in my name and then eventually transferred since we're not married but the implications of how it is paid for and eventually wanting to be tenants in common rather than joint tenants raises more questions for the solicitor I think.