stamp duty question

[Footu]

if i have two homes and sell the main residence to buy another do i have to pay stamp duty on the 'additional property band' or does count it as my sole property.

neither are let, there is only a mortgage on my main property.

 

thanks for any help.

[Cosd]

You pay stamp duty on any property purchase.

[oowee]

Not sure what you mean 'additional property band' but tax has to be paid on every property you buy over £125k.

[Footu]

new banding rules have come out, its more expensive to purchase a second proerty now. im not sure if 'second property' pertains to housing you but to let , holiday homes or total number of house owned, even if it your main home.

[Munzy]

You pay the additional 3% on any second property you buy, whether it's to reside in or to rent out.

 

Accountants and lawyers seem unsure on exactly how this works, mine told me if I bought another property in a LTD company structure and it was the only property the business owned then I (the company) would not pay the 3% extra SDLT. My friend was told the exact opposite by his guys.

[Bobba]

There is an article on Zoopla which includes a "government" quote. In summary it seems to be saying that if the property you are buying is to be your main residence and replaces the main residence you have sold then the new property will not be subject to the additional 3% stamp duty.

[Lloyd90]

There is an article on Zoopla which includes a "government" quote. In summary it seems to be saying that if the property you are buying is to be your main residence and replaces the main residence you have sold then the new property will not be subject to the additional 3% stamp duty.

This is my understanding as well!

 

Essentially "swapping" one property you own for another should not result in the additional 3% stamp duty as at the end of it you will own the same number of properties, not an additional one.

[wandringstar]

the chancellor brought it in, it was applied in april last year, effectively any second property you buy is classed as a buy to let even if it isn't, so the rate is 3%,

I am not sure if this rate rises in relevance to value, but I do know that this is the minimum that has to be paid, as opposed to the old minimum rate of 1%.

 

if I am wrong, please correct me.

[walshie]

3% over and above what the stamp duty would be if it was your only property.

[Rupert]

You pay stamp duty on any property purchase.

Land is exempt.Currently.

[Lloyd90]

3% over and above what the stamp duty would be if it was your only property.

Unless your selling your current main home and buying a new one. I quote

 

"If the home you are buying replaces your main residence, you will not be liable for the 3% surcharge, even if you own an additional property/properties (such as a second home, or let flat) at the same time. This example is straight from the Government's consultation document:"

 

Read more at http://www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/#PAtJV4uB2jsVjSCj.99

[Tedly47]

Yes you will have to pay the second home tax, if you go on the government web sight they have a calculator, now if you sell your home you can claim it back within three years of the purchase of the second home.

 

I've just bought a derelict property for my family to live in the future and it cost me an extra 10000 which I'll never get back as I'm a landlord😬

[wandringstar]

Yes you will have to pay the second home tax, if you go on the government web sight they have a calculator, now if you sell your home you can claim it back within three years of the purchase of the second home.

 

I've just bought a derelict property for my family to live in the future and it cost me an extra 10000 which I'll never get back as I'm a landlord

 

punished for helping your family, its disgusting

[Footu]

Unless your selling your current main home and buying a new one. I quote

"If the home you are buying replaces your main residence, you will not be liable for the 3% surcharge, even if you own an additional property/properties (such as a second home, or let flat) at the same time. This example is straight from the Government's consultation document:"

Read more at http://www.zoopla.co...V4uB2jsVjSCj.99

 

Perfect, thanks Lloyd90. that's gonna save me 10000. Even if I have to claim it back within 3 years.

[Lloyd90]

Unless your selling your current main home and buying a new one. I quote

"If the home you are buying replaces your main residence, you will not be liable for the 3% surcharge, even if you own an additional property/properties (such as a second home, or let flat) at the same time. This example is straight from the Government's consultation document:"

Read more at http://www.zoopla.co...V4uB2jsVjSCj.99

 

Perfect, thanks Lloyd90. that's gonna save me 10000. Even if I have to claim it back within 3 years.

Not a problem 👍

[Lloyd90]

You pay the additional 3% on any second property you buy, whether it's to reside in or to rent out.

 

Accountants and lawyers seem unsure on exactly how this works, mine told me if I bought another property in a LTD company structure and it was the only property the business owned then I (the company) would not pay the 3% extra SDLT. My friend was told the exact opposite by his guys.

Q. Can I avoid the surcharge by setting up a limited company?

 

A. The Government has a keen eye on preventing tax avoidance with this levy, so you won't be able to escape the surcharge by setting up a limited company for the purpose of buying a home or homes.

 

Q. What if I already have a limited company?

 

A. The surcharge will still apply when buying a residential property through an existing limited company.

 

 

Read more at http://www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/#7z2YKZUkfckwgssv.99

[LondonLuke]

Lot of misinformation in this thread.

 

If you are selling the house you live in to buy another to live in then the 3% does not apply regardless of owning another one or one hundred homes.

 

If you buy another house which will be your home to live in without selling your existing home you will pay the 3% - BUT this can be reclaimed if you sell the original home in the following three years.

[lord_seagrave]

Lot of misinformation in this thread.

 

If you are selling the house you live in to buy another to live in then the 3% does not apply regardless of owning another one or one hundred homes.

 

If you buy another house which will be your home to live in without selling your existing home you will pay the 3% - BUT this can be reclaimed if you sell the original home in the following three years.

This.

 

We have recently done something similar.

 

Surcharge doesmt apply if you are replacing your main residence.

 

LS

[LondonLuke]

This.

 

We have recently done something similar.

 

Surcharge doesmt apply if you are replacing your main residence.

 

LS

Are you still in W2?!

[Munzy]

Apologies, completely missed the fact you are selling your main residence and will be living in the next one you buy. In hindsight it is obvious that's what you meant, I don't live in the UK full time so that conclusion didn't even register. I assumed you were selling your main residence and buying another investment property.

 

As has been said, you won't pay the surcharge if you are selling your home and buying a new home at the same time. If you buy your new home before selling your old home your lawyer will likely ask you to pay the surcharge and then claim it back once your old home has been sold.

 

As for buying additional properties in a LTD company then definitely speak to more than one accountant. As has been said, my accountant is happy that a new LTD Co with no existing property ownership can buy a property which in effect would be "my" fifth property if I bought I personally. On the other hand my friend was told he couldn't do that.

 

The link above regarding property ownership in commercial structures is guidance, there is a very good chance this loophole will change and landlords using LTD comoany structures will get stung too.

[lord_seagrave]

Are you still in W2?!

Tee-hee, yes, mostly.

 

The Seagrave family property arrangements are mildly complex...

 

LS

[Lloyd90]

Apologies, completely missed the fact you are selling your main residence and will be living in the next one you buy. In hindsight it is obvious that's what you meant, I don't live in the UK full time so that conclusion didn't even register. I assumed you were selling your main residence and buying another investment property.

 

As has been said, you won't pay the surcharge if you are selling your home and buying a new home at the same time. If you buy your new home before selling your old home your lawyer will likely ask you to pay the surcharge and then claim it back once your old home has been sold.

 

As for buying additional properties in a LTD company then definitely speak to more than one accountant. As has been said, my accountant is happy that a new LTD Co with no existing property ownership can buy a property which in effect would be "my" fifth property if I bought I personally. On the other hand my friend was told he couldn't do that.

 

The link above regarding property ownership in commercial structures is guidance, there is a very good chance this loophole will change and landlords using LTD comoany structures will get stung too.

I believe you can buy a property with a LTD company, as companies house had a specific type for companies whom purchase property (e.g. Buy to let) however I'm under the impression that they still have to pay the extra 3% stamp duty? Am I mistaken?

 

Or did you mean they are looking to change their tax liability as they have done with landlords who own on their own name?

[Munzy]

I believe you can buy a property with a LTD company, as companies house had a specific type for companies whom purchase property (e.g. Buy to let) however I'm under the impression that they still have to pay the extra 3% stamp duty? Am I mistaken?

 

Or did you mean they are looking to change their tax liability as they have done with landlords who own on their own name?

I can't say whether you're mistaken since the professional accountants and solicitors seem to be in disagreement even! I have been told that despite owning several properties personally if I buy another in a LTD Co I create for the sole purpose of the purchase then the company won't pay the surcharge.

 

No idea if it's correct as have also been told the opposite but my accountant and solicitor are happy to sign it off.

 

For the record I decided it isn't worth going the LTD Co route. Lots of added admin and cost whilst the addition of an extra 3% I recently used as a negotiation tool and had it taken off the agreed property price as the seller was keen to move on.

[Lloyd90]

I can't say whether you're mistaken since the professional accountants and solicitors seem to be in disagreement even! I have been told that despite owning several properties personally if I buy another in a LTD Co I create for the sole purpose of the purchase then the company won't pay the surcharge.

 

No idea if it's correct as have also been told the opposite but my accountant and solicitor are happy to sign it off.

 

For the record I decided it isn't worth going the LTD Co route. Lots of added admin and cost whilst the addition of an extra 3% I recently used as a negotiation tool and had it taken off the agreed property price as the seller was keen to move on.

Ah I get you. I have read that LtD companies do have to pay the extra 3% (mad isn't it, obviously not been made clear) but they will pay less tax now than 40% tax payers.

 

This also makes a big difference that rental income rather than just profit counts towards what your income is.

 

Similar scheme in Ireland had to be repealed after it caused rental to go up severely! Cant see much else happening here.

[Munzy]

The inability to deduct borrowing against turnover for rentals is a real blow but still a huge number of landlords don't know anything about it.

 

Doing it through a LTD Co will help, however, it may well be that this is tackled in this years budget too. I think it's a bit of an own goal to be honest, it will put off many landlords from expanding and might drive some "accidental landlords" to sell off property but it will also force professional landlords to put rents up to cover the additional taxation.

 

I don't think it will have the cooling effect on the housing market or the private rental sector that many would hope. Those that rent will end up paying more which will drive more people to buy which will increase demand where there is limited supply. Prices will go up.