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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We own several rental properties (holiday lets and shorthold

Customer Question

We own several rental properties (holiday lets and shorthold tenancies) in the UK. We live part of the year in France and when in the UK we stay in whichever property is vacant at the time. Now my husband is out of work, possibly retired, and we think it's time to buy a home for ourselves in England, not to rent out, just our own home to live in. Our solicitor says we will have to pay 3% stamp duty but I don't understand why. We are trying to arrange a buy to let mortgage on another property we own and we will use that money to pay for half of the new property and our cash for the other half. Is that why my solicitor thinks that we will have to pay the new stamp duty rate? It doesn't make sense to us that the only home we will not be renting out will be the one we pay an extra 3% on. We can't get a buy to let mortgage on the new property as we're not letting it, it doesn't make sense.
Submitted: 5 months ago.
Category: Tax
Expert:  TonyTax replied 5 months ago.

Hi.

Take a look at the document here. I refer to it later in this answer.

Whether you will have to pay the increased stamp duty or not depends on whether you are replacing your current main residence. Look at the chart in section 1.1. If you intend to sell your previous main residence within 3 years of buying the new one but don't so before the new purchase completes, then you will have to pay the increased stamp duty but so long as you sell your previous main residence within 3 years, you can make a claim for a refund of the additional stamp duty. The chart says 18 months but Osborne caved in to the buy to let lobby and increased the grace period to 36 months, defeating the stated object of the policy in my opinion. See section 2.8 to determine whether you are replacing a previous main residence. Section 2.12 states that foreign property is included in the property count for the purpose of the stamp duty increase.

I hope this helps but let me know if you have any further questions.

Customer: replied 5 months ago.
Hi. Ok, I'll read it through. I think the grey area is that we don't actually have a main residence. I live in the UK from November to April and I usually just stay in one of our apartment, my husband has been working in Qatar for years so he's a hobo really, he doesn't spend much time anywhere. I have a house in England that I bought about eighteen years ago, it was the family home but it has been rented out as holiday lets for about nine years. I would have thought that would now be considered to be a rental? We had planned to sell the flat that I spend my winters in but the sale fell through. We thought that as we only have a holiday home in France and no fixed abode in the UK we would be entitled to buy ourselves somewhere to retire to that is separate from out investments properties.
Expert:  TonyTax replied 5 months ago.

Your case is clearly not standard. HMRC will probably say that either the French property or the property you winter in is your main home. Section 2.8 gives the criteria that they will use to make the determination. You will have to get that sorted out so that you know which property you can sell within 36 months and claim a refund.

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