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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4545
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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This question is about stamp duty: We own 2 properties. We

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This question is about stamp duty:We own 2 properties. We have owned these two properties from June 2014 i.e. before April 16 which is when the new 3% stamp duty surcharge came into place.One property is a buy to let investment, the other property is the main residence where we live.We are in the process of selling our main residence house, and buying another one. Do we have to pay for the extra 3%?According to the below link, it would appear that replacing the main residence has an exemption.Also I would like to know if we have to pay the extra 3% and request a refund or simply not paying it as it is the main residence, and how is this dealt with the HMRC?ThanksCarolina
Submitted: 1 year ago.
Category: Finance
Expert:  Rakhi Vasavada replied 1 year ago.

Dear *****ina,

Hello and welcome. Thank you for providing an opportunity to assist you.

YES -- You are perfectly correct. You will NOT be liable for additional 3% duty. Let me explain.

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:

"A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 1 year ago.
Just one more thing, which is not clear from your answer:I have read in the attached link that we would have to pay for the 3% and then ask for a refund, however if all we do is swapping properties, is there a mechanism so that we do not have to pay the 3% at all, and is this something that needs to be notified to the HMRC in a particular way?Thanks for letting me knowhttps://www.stampdutycalculator.org.uk/stamp-duty-second-homes.htmKind regards
Carolina
Expert:  Rakhi Vasavada replied 1 year ago.

Welcome Carolina once again.

From what I understand from your situation, that this 3% additional payment will be required ONLY IF you keep your first main residence and buy the second one BEFORE selling the first one.

If you move out of your main residence (Home A) but keep it and buy another main residence (Home B), you will have to pay the 3% Stamp Duty surcharge initially.

However, so long as you sell Home A within 36 months (increased from 18 months in the March 2016 Budget) of completing on the purchase, HMRC will make a full refund.

The refund applies, in fact, to the sale of any property that has been your only or main residence at some point during the 36 months leading up to the purchase (ie, you don't have to be moving directly out of one main residence and into a new one).

How long you have lived in a previous main residence will not be relevant.

So, if you have already disposed off your main residence before buying the another one, this additional payment will not arise at all. Otherwise, there will be this refund process that will follow.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 1 year ago.
Hi RakhiIt would be a simple completion with a chain so on the date of completion our buyer gets our current house and we buy the new one. Therefore we would not be keeping our current residence.Therefore can you please confirm that the 3% does not apply in this situation, and if we need to notify the HMRC somehow or of we simply carry on with our purchase, our solicitor collects and pays the stamp duty to the HMRC as normalWhat is the right process for this?Thanks for letting me knosCarolina
Expert:  Rakhi Vasavada replied 1 year ago.

Hello again.

In this case, you can simply go ahead with the purchase and the 3% additional duty will not be applicable. There is a separate process ONLY IF you are claiming a refund, and not otherwise.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 1 year ago.
Do we have to notify the HMRC about anything or we just simply buy the house and pay the normal stamp duty?
Expert:  Rakhi Vasavada replied 1 year ago.

Hello again.

No. You can simply go ahead buying the house. There is no separate process to "inform" HMRC. You will not pay additional 3% as well as you are NOT keeping your first house.

There is a provision of a separate process ONLY if you are to claim a refund and not otherwise.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

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