Anyone who knows about the new SLDT regime / additional property, over here please!

[EssentialHummus]

I think I know the answer to this, but I'm not certain.

DH (we're married) and I live in a flat that I own alone. I also have another house (alone), and he has another flat (alone). We've now found somewhere that we want to move / a serious contender at least. I'd like to keep and rent out the flat we now live in.

IIUC, because we're married, we count as one unit - so if we do the above, we'll pay tax at the additional rate on our next home. It's about double what we'd otherwise pay.

Other options: Divorce (?). Transfer this flat into a company, pay SDLT on that. Sell this flat (though I imagine it wouldn't be a quick sale).

What's the correct approach in the circumstances? Has anyone faced similar?

Set up a company for the new property with you both as directors?

I have a feeling if you sell and rebuy your main home then you get out of it, but that could have only applied if it was before they announced it.
Best to find the information from gov.Uk and put your reading hat on, as I've heard of solicitors even getting it wrong

prada are there company mortgages available for residential (not Btl) property?

john thank you. I've had a read (I actually am a lawyer!), but I am still uncertain.

Presumably the company route also has some costs/taxes.

I think there are rules for companies buying property enveloping or something.

Not sure how you'll get a mortgage for a non trading company.

how best to game the system
tricky!

No way out of it, pay up and look big.

If you sell your second property within 18 months you can claim the additional tax back.

so unfair isnt it, the way the govt has imposed an extra tax burden on those who want to buy up as many properties as they can
every propery you can hoover up means one less owner occupier working towards a secure home of their own
and one more poor sod working hard to line your pockets and provide you with a comfortable secure retirement

If you sell your main home and buy a replacement main home you don't pay the additional rate of Sdlt. That's the only way to do it. I wouldn't do the company thing personally. I don't think it would get you out of paying the additional rate of Sdlt because you still own other properties and you wouldn't be replacing your main home. Also, if you put it in a company you could bring yourself within the annual tax on enveloped dwellings (Ated) if the flat is worth over £500k. There is a relief for properties that are rented out but it seems like a bit of a faff for no real benefit.

Just pay it. I own the house we live in dh owns and rents out his house. We jointly own a flat and we have just bought another near derelict house as a project for him to renovate and then rent/sell. I think these tax changes are good we lost out on two houses we liked as the four % stamp means we have to offer less than private buyers. That's a good thing.

pita thank you. The ATED thing is a worry - the flat is well under £500k now but seems to be increasing in value, and I also worry that the £500k threshold could come down again. I assumed transferring it to a company was selling it enough.

If you were to buy the new house as a company, my understanding is that you'd have to pay market rent to live there (although i don't know how scrupulously enforced this would be) and you'd need to pay corporation tax on any profit from that income. You would also need to pay corporation tax on any profit if/when you came to sell it. So, regardless of the morality of doing this, it may end up being more expensive rather than just paying the additional stamp duty

Thanks lala. Buying the new one as a company seems to be the least logical approach, for the reasons you state. I'm also still not convinced that there's a big market for company-owned resi mortgages.

The issue, I guess, is whether to transfer our current home to a company, or sell it to, say, my dad, and pay SDLT on the market rate, or sell it to a third party (which by all accounts will take forever - it is a genuinely lovely, huge, inexpensive two bed flat in Zone 2, but it's ex-council and unless the market is hot they tend to languish - I bought it after a year on the market). Or just pay the extra £40,000 in SDLT. Which we'd rather not do.