Second home tax advice?

Hemberley · 2021-02-05T18:24:06+00:00

I wasn't sure whether to post here or in the Money topic but here goes.... DH and I are selling our current home and using the proceeds to purchase two properties. We will have the less expensive of the two new places as the "second home", but what happens if we complete on the more expensive property AFTER the cheaper one? Would the more expensive one then become the second home, and therefore subject to the extra 3% SDLT? If anyone has any knowledge I would be very grateful - can't find info on timings like this on HMRC website.

waitrosetrollydolly · 05/02/2021 18:39

Put one in your name and one on your partners. Treat each as your main residence and visit each other regularly.

Original poster

Hemberley · 05/02/2021 18:46

Would love it if it were that simple! But I've been Googling and I think that because we are married then that will make no difference.

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Original poster

Hemberley · 05/02/2021 18:51

as in, because we are married, what's his is mine and vice versa, so we would still be taxed jointly

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VinylDetective · 05/02/2021 18:57

@Hemberley

as in, because we are married, what's his is mine and vice versa, so we would still be taxed jointly

I think that only applies for division of assets for divorce. I think waitrose is right. You could easily be separated.

user1487194234 · 05/02/2021 19:01

Put one in your name and one on your partners. Treat each as your main residence and visit each other regularly.
Fairly sure the anti avoidance legislation will stop you doing that
I think you will pay the additional 3% points n the one you that won’t be your main home

minipie · 05/02/2021 19:47

@waitrosetrollydolly

Put one in your name and one on your partners. Treat each as your main residence and visit each other regularly.

Fucking hell. You’re actually advising tax evasion on here?

Original poster

Hemberley · 05/02/2021 19:56

Yes I know we pay extra 3% on the one that's not our main home. We plan for the lower value property to be not our main home. However if we complete on the lower value property first, that will mean the HIGHER value property will be our second home and the extra 3% on the higher value home will be obviously a lot more expensive.

So, what I'm trying to find out is, can a second home be bought first!!

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Badbadbunny · 05/02/2021 19:59

@waitrosetrollydolly

Put one in your name and one on your partners. Treat each as your main residence and visit each other regularly.

Doesn't work for a married couple. Being married means the couple can only have one "main residence" at a time.

stevalnamechanger · 05/02/2021 19:59

This is why I didn't get married 😅😂

Badbadbunny · 05/02/2021 20:00

@Hemberley

Yes I know we pay extra 3% on the one that's not our main home. We plan for the lower value property to be not our main home. However if we complete on the lower value property first, that will mean the HIGHER value property will be our second home and the extra 3% on the higher value home will be obviously a lot more expensive.

So, what I'm trying to find out is, can a second home be bought first!!

Which home will be your "real" home, i.e. where you actually live most of the time, and which you'll ultimately claim as your "main residence" for CGT relief when you come to sell one or other of them?

Pipandmum · 05/02/2021 20:03

Ask your solicitor, but will you actually be moving into the cheaper home if that completes first? You will be able to get a rebate if you end up paying the higher rate on your main residence due to sequencing of your purchases.

Original poster

Hemberley · 05/02/2021 20:18

@Pipandmum

Ask your solicitor, but will you actually be moving into the cheaper home if that completes first? You will be able to get a rebate if you end up paying the higher rate on your main residence due to sequencing of your purchases.

Ah! That's the crux of it. Yes I'm worried we may have to move into the cheaper home first, due to the order of purchase.

I've already asked our solicitor but he says he is not allowed to advise me. I have no idea about asking a tax specialist and worry that I will get bad advice / rack up a massive bill. HMRC website not clear.

If we would get a rebate then that is encouraging because it seems a bit unfair otherwise.

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Alienchannell21 · 05/02/2021 20:39

I don't know about all the legalities and my situation may be different but, my dh had his name on 1st house (we bought together and lived there for 15 years but for mortgage reasons I was never on deeds etc). Ive just recently bought a house in my own name (sale fell through on original house) so I had to get mortgage on my own to complete sale on new house. We've completed on first house and now paying off mortgage on second. My solicitor is very thorough and hasn't said we've done anything wrong??

tanguero · 05/02/2021 20:54

'We've completed on the first house'. ??? Completed what ? Have you sold it ? Mortgage ?

Veuvestar · 05/02/2021 21:06

You just claim the more expensive one as your main home.
You claim it back, but there’s a time limit.

www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties

Alien, are you keeping both houses? If yes, then you should pay extra 3%

Original poster

Hemberley · 05/02/2021 21:15

@Alienchannell21

I don't know about all the legalities and my situation may be different but, my dh had his name on 1st house (we bought together and lived there for 15 years but for mortgage reasons I was never on deeds etc). Ive just recently bought a house in my own name (sale fell through on original house) so I had to get mortgage on my own to complete sale on new house. We've completed on first house and now paying off mortgage on second. My solicitor is very thorough and hasn't said we've done anything wrong??

My solicitor says he is not allowed to advise me on this due to Law Society Guidelines.

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Original poster

Hemberley · 05/02/2021 21:20

@Veuvestar thank you for the link, that looks hopeful but it refers to selling "what was your main home." We won't be selling it, we will have two homes. The only one we are selling is the current family home in order to buy these two new homes.

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nicknamehelp · 05/02/2021 21:23

If you sell 1 house and move into a house that house would be your main residence and be this till you buy/ move into another property when this will then become your main residence and previous house assuming you didn't sell it the 2nd home.

Dogsandbabies · 05/02/2021 21:25

We were in a similar position OP. We had to prove that one of the houses was our main residence. It was relatively easy to do. Supplied payslips to prove we live in London and the other property was going to be a secondary property. Our solicitor filed the papers. Never had an issue. We had to pay the extra SD on the second property though. I did take advice from my solicitor though on what documentation was needed.

Dogsandbabies · 05/02/2021 21:28

www.blakemorgan.co.uk/wp-content/uploads/Downloads/SDLT-case-studies-for-3-surcharge-20.01.20.pdf

I found this very useful.

Original poster

Hemberley · 06/02/2021 12:13

@nicknamehelp so in theory we could simply move to the cheaper property which will ultimately be the second home, but declare it is our main residence. Then when we complete on the more expensive house, declare THAT as our main residence and the other one now the second home? And THEN pay the extra 3% on the cheaper property. So we pay the extra 3% on the cheaper property off the bat, rather than paying it for the more expensive one and then claiming it back?

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Original poster

Hemberley · 06/02/2021 12:19

@Dogsandbabies thank you - that link is really useful - they look like reputable people. I signed up to JustAnswer and asked my question but the bloke who has responded is incredibly unhelpful with brusque answers, his latest being "you will be liable to the 3% surcharge on very duplicate dwelling you purchase." No idea what that means. The properties aren't duplicates, they are very different, and we are only buying the two anyway.

Not altogether sure how similar your situation was - the main issue with ours is that we are buying two places pretty much at the same time because they both depend on the sale of our current (only) residence. There's a danger that the proposed second home will complete first so I'm concerned that the extra 3% will be due on the wrong one - i.e. the more expensive one!!

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Original poster

Hemberley · 06/02/2021 12:27

Sorry- typo in my transcript of unhelpful man's response - VERY should say EVERY.

I'm aware it's not recommended to ask randomers on the internet - whether through JustAnswer or Mumsnet. (Although Mumsnet is always brilliant and friendly and I've had so much help on here over the years albeit under different user names).

I have reached out to a local tax accountant but I'm very wary of them charging something ludicrous just to tell me something I could find out for myself, plus as demonstrated by JustAnswer bloke, these people do respond in fairly jargony ways and I need to know clearly and in layman's terms/plain English.

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VanGoghsDog · 06/02/2021 12:35

@Hemberley

Yes I know we pay extra 3% on the one that's not our main home. We plan for the lower value property to be not our main home. However if we complete on the lower value property first, that will mean the HIGHER value property will be our second home and the extra 3% on the higher value home will be obviously a lot more expensive.

So, what I'm trying to find out is, can a second home be bought first!!

Yeah, cos it's the second home to your current home at that point.

Original poster

Hemberley · 06/02/2021 12:50

@VanGoghsDog thanks for the reply! But no, it won't be the second home to our current home at that point - we are selling our current home to fund the purchase of these two new properties. Our current home at that point would belong to someone else.

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