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Original poster

Stamp duty question

47 replies

Cheeseismymiddlename · 09/05/2021 16:39

We have inherited a house. Probate granted so we can sell when we are ready . Likely we will miss the stamp duty deadline when buying another property. Hey ho.
We want to keep our current home and rent it as I have no decent pension. We want to move into the newly purchased home , it will be our main residence.
Stamp duty is significantly higher on “additional” properties / holiday homes than on main residence homes . The new house will be our main residence. I cannot work out if this means we will pay the “normal” level of stamp duty or the second home owner rate. The wording on line isn’t clear.
The difference is staggering , ie 5000 pounds or 14,000 pounds.
Any one know the answer for sure? Obviously I can ask a solicitor when the time comes but just wondering if anyone knows the short answer.
Thank you .

OP posts:
Original poster
Cheeseismymiddlename · 09/05/2021 16:39

The Stamp duty holiday dead line I mean. Blush

OP posts:
PlayerOneNotReady · 09/05/2021 16:48

You'll have to pay the additional rate for your new home, as it will be the second property that you own, so yes, the £14k. But, if you sell your current home within 3 years, then you can claim back the extra you have paid now (so claiming back £9k).
I don't think it makes any difference that the new house will be you main home, it's the fact that you'll own more than 1 which kicks in the extra level stamp duty.
Disclaimer: not a professional, just a serial house buyer 😁

Original poster
Cheeseismymiddlename · 09/05/2021 16:53

Thanks playerone. Not the answer I was hoping for mind you.

OP posts:
wintertime6 · 09/05/2021 17:02

But you don't pay the extra stamp duty if you're replacing your main residence, even if you also own a second property. So is there not some way you can move now to the inherited house and have it as your main residence, and then sell it and buy a new main residence??

Obviously you need some legal advice, but we looked into this a couple of years ago although it was a slightly different situation.

korawick12345 · 09/05/2021 17:04

@wintertime6

But you don't pay the extra stamp duty if you're replacing your main residence, even if you also own a second property. So is there not some way you can move now to the inherited house and have it as your main residence, and then sell it and buy a new main residence??

Obviously you need some legal advice, but we looked into this a couple of years ago although it was a slightly different situation.

Yes you do. You don't pay CGT on your main residence but you will pay the additional stamp duty. The poster above is correct
wintertime6 · 09/05/2021 17:09

@korawick12345 you don't pay the higher rate of stamp duty if you are replacing your main residence (or if you sell you main residence within 3 years you can claim a refund) even if you own a second home.

Aroundtheworldin80moves · 09/05/2021 17:12

We own two houses, one rental one residence. Rental was owned first. So when we bought the residence this year, we had to pay the higher stamp duty (but got the discount for being in the holiday).

korawick12345 · 09/05/2021 17:24

[quote wintertime6]@korawick12345 you don't pay the higher rate of stamp duty if you are replacing your main residence (or if you sell you main residence within 3 years you can claim a refund) even if you own a second home.
[/quote]
Yes but the OP has no intention of disposing if their current house therefore they will need to pay. The exemption only applies if the OP disposes of their current house.

Brakebackcyclebot · 09/05/2021 17:26

you don't pay the extra stamp duty if you're replacing your main residence, even if you also own a second property

This is wrong. I know because I am doing exactly this right now. Even though I own my house, which we are selling, in my sole name and DH owns the other house, which is rented out, on his sole name.

Because we are married we are viewed as owning 2 properties as a couple and we have to pay 3% stamp duty on the entire purchase price of the property we are buying together to live in.

Brakebackcyclebot · 09/05/2021 17:27

To be clear the 3% is additional to the normal rate of stamp duty payable on the purchase of the new house.

There is a reclaim provision if you sell the second property within a certain time period, as previous posters suggest.

wintertime6 · 09/05/2021 17:29

@korawick12345 the exemption applies to disposing of their main residence, not their current house. Which is why I was asking if there is any possibility of moving to the inherited house now, making it their main residence and renting out their current house. And then purchasing a new house in the future.

Obviously I have no idea if the location of the inherited house makes this feasible or how quickly they want to move, but certainly worth looking into the possibility given the potential savings?

korawick12345 · 09/05/2021 17:34

[quote wintertime6]@korawick12345 the exemption applies to disposing of their main residence, not their current house. Which is why I was asking if there is any possibility of moving to the inherited house now, making it their main residence and renting out their current house. And then purchasing a new house in the future.

Obviously I have no idea if the location of the inherited house makes this feasible or how quickly they want to move, but certainly worth looking into the possibility given the potential savings? [/quote]
Their current house is their main residence hence my comments. Obviously if they move houses and then purchase a further property then it will be a different situation!

Original poster
Cheeseismymiddlename · 09/05/2021 18:10

Thank you for all replies . Inherited house is 400 miles away so we cannot move into it short term just to avoid the extra stamp duty but helpful suggestion , thank you. Also thank you to the poster who answered another thought regarding the relevance of names on deeds.

OP posts:
wintertime6 · 09/05/2021 18:54

@Brakebackcyclebot that's not how it works in my part of the UK although I know different nations might have different rules. Where I am, if you and you DH's main residence is the one you're selling to buy a new main residence for yourselves then you pay the lower rate of stamp duty, it doesn't matter if either of you or both of you own another house which isn't your main residence, and it doesn't matter who's name is on each of the house deeds because you're married.

The tax rules are in place for investors, not for people who want to move house themselves, even if they happen to also own a second house they rent out. We spent lots of time making sure we had our facts straight on this as our situation wasn't straightforward.

Brakebackcyclebot · 09/05/2021 18:59

We are moving house ourselves from one main residence to another.

Are you talking about CGT, as this is different.

wintertime6 · 09/05/2021 19:52

@Brakebackcyclebot I'm talking about stamp duty. Where do you live? You should not be paying the higher rate if it's from one main residence to another main residence, unless you live in a nation with different stamp duty rules??

Original poster
Cheeseismymiddlename · 09/05/2021 20:00

This is really interesting . I’m in England , both homes in England and anything we buy will be in England, at least that much is straight forward. Grin

OP posts:
Huhn · 09/05/2021 20:03

@wintertime6 youve missed the part where Op isn’t selling main residence. So the first poster was correct.

I’m a tax accountant, OP will pay 3% additional rate, unless they sell in 3 years and claw it back.

Brakebackcyclebot · 09/05/2021 20:05

I'm in England, and have got this advice from my solicitor, and a second one. My understanding is it doesn't matter which house you live in, it's simply about how many you own. Huhn are you able to shed light?

GherkinsOnToast · 09/05/2021 20:07

We have just done this. We moved out of our house, which like you we are keeping for pension purposes, and purchased our new home. We have paid the higher rate of Stamp duty again the difference was about 10K because it is a second property - main residence or not. If we sell in the next 3 years we can claim back the additional SD paid.

We are in England and so are both houses (about 3 minutes apart :D)

Brakebackcyclebot · 09/05/2021 20:13

I think you are wrong #wintertime6. If you own a house and buy another one for any reason, you pay the additional stamp duty. I'm talking about England. And you can't get round it by having one of them in your name and one in DH's.

wintertime6 · 09/05/2021 20:21

@Brakebackcyclebot maybe the rules are different in England then, fair enough, I'm sure your solicitor is correct. In NI, the rules for replacing your main residence apply. Here, the extra stamp duty is not applied to people making a move to a new main residence, even if they already own other properties, but it would apply if you already owned your main residence and then bought a house to rent out for example.

We spent lots of time making sure we had our facts straight on this because of the potential extra costs which we could have incurred, but i only know what the situation is in NI.

wintertime6 · 09/05/2021 20:27

@Brakebackcyclebot

I think you are wrong #wintertime6. If you own a house and buy another one for any reason, you pay the additional stamp duty. I'm talking about England. And you can't get round it by having one of them in your name and one in DH's.
Yes completely agree, I think we've maybe crossed wires somewhere, maybe I wasn't clear with what I said 🙈. If you own the house you live in and then buy a second house you of course will pay the higher rate of stamp duty. And if you sell your original main residence within 3 years you can claim it back.

What I was trying to say is if you own 2 houses (main residence and rented out house), then you don't pay the higher rate if you sell main residence and buy new main residence. But you do pay higher rate if you sell buy to let and purchase new main residence (while keeping original main residence and e.g. converting it to buy to let).

That's the situation in NI anyway, it may of course be different in England!