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I wish to understand the new stamp duty rules that came into

Resolved Question:

I wish to understand the new stamp duty rules that came into place on April 1st 2016. What constitutes a buy to let property? If you are buying your first property does it still get stamp duty at the new rate or the old?
Submitted: 5 months ago.
Category: Tax
Expert:  bigduckontax replied 5 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The purpose of the Stamp Duty Land Tax (SDLT) surcharge was to deter individuals form buying more than one home. It is set at #%.

It only applies to a second property. If the buy to let property you are contemplating is your only property then the surcharge does not apply. CCH Daily has the following pithy summary [note the word additional]:

'Higher rates of SDLT will be charged on purchases of additional residential properties, such as buy to let properties and second homes, with effect from 1 April 2016. this will apply to additional property purchases valued at over £40,000.

The higher rates will be 3% above the current SDLT rates. At the same time changes to capital gains tax payment dates will be reduced to 30 days after completion rather than the current 10 to 22 month payment window.'

Of course the surcharge will catch nearly all buy to let acquisitions.

A Buy to Let is defined in Wikipedia as:

'a phrase referring to the purchase of a property specifically to let out, that is to rent it out'

I do hope that I have been able to shed some light on your question.

Customer: replied 5 months ago.
this is nice and clear. However my situation involves a houseboat too.If I own a houseboat and rent it out, then i also buy a property (outright as cash buyer) and choose to rent it out as well then would the property be liable to the new 3% stamp duty hike?I understand that houseboats are exempt from stamp duty but in this scenario i already own the boat.More generally, even if i buy a property outright as a cash buyer - do i still count as a 'buy to let' even if i have no mortage? I have bought, then chosen to let, does that mean i am a buy to let?many thanks
Expert:  bigduckontax replied 5 months ago.

As houseboats are specifically excluded from SDLT. I do not think you need to worry on that score.

Forget about mortgages, they are irrelevant in this matter. If you are buying to let out it is a buy to let, end of story.

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 5 months ago.
that's a very vague answerFirstly. If I buy a property then after 2 years of living in it decide to rent it out - is it now a buy to let property? Was it a buy to let property when I bought it even if i had the intention of letting it out at any time?Secondly. The houseboats question is really about what counts as property or a first/second home. The Stamp Duty hike applies to second homes only as you have clearly stated. However is the more pressing issue here where your main residence is at the time of purchase? or what property you own?Saying you don't 'think' i should worry doesn't exactly fill me with confidence - im going to need a better answer.Many thanks
Customer: replied 5 months ago.
Also i'm not looking for a cut and paste from wikipedia, I'm looking for an experts answer...
Expert:  bigduckontax replied 5 months ago.

What is wrong with the excellent Wikipedia definition? Just Answer protocol requires me to quote all my sources.

Deciding to rent out a property you own and live in does not convert it to a Buy to Let. The latter is a property specifically acquired to let out.

As houseboats are outside the scope of SDLT then their occupation would not attract the surcharge wer you to buy an additional property elsewhere.

Customer: replied 5 months ago.
thank you - but you still haven't really answered the questionIf i buy a property now with the intention of renting it out in 2 years, does it qualify as buy to let?on houseboats. You say 'their occupation would not attract the surcharge' for a property elsewhere. OK, how about owning them? rather than occupying.And yes i'd like your source for the latter
Expert:  bigduckontax replied 5 months ago.

The definition is:

'the purchase of a property specifically to let out, that is to rent it out'

Thus it would probably come within that definition, but not if you first occupied the property as I explained earlier.

\my answer embraces owning as well as occuping.

Customer: replied 5 months ago.
what is your source for the houseboat answer please
Customer: replied 5 months ago.
Also you still haven't answered...
In the scenario I plan to buy a property, live in it for 2 years, then rent it out. Is it a buy to let?
Expert:  bigduckontax replied 5 months ago.

I have answerd this follow up. If you buy a property, live in it then decide to let it out it does not become a Buy to Let. It is not a property bought specifically to be rented out.

Houseboats are outside the scope of SDLT. That information is available from the Gov UK Web Site.

Customer: replied 5 months ago.
to be clearBy your definitions and sources1) It sounds like my scenario falls between your definitions as I would intend to both live in and rent out the property. The reason I asked is because you used the word probably which is not an solid answer. I realise it doesn't become a buy to let but is it a buy to let at the time of buying if your intention is to live in it then rent it out? If you don't know for sure or want to say probably then that is fine it'll just mean you don't know for sure.2) If somebody owns 4 houseboats and a caravan and is buying their first bricks and mortar property then they pay stamp duty at normal rate and not the SDLT hike? Yes or no.
Expert:  bigduckontax replied 5 months ago.

1. I am saying that if you buy to occupy and later rent it out it does not become a buy to let. Literally thousands of people would be thrown into that definition were that the case.

2. Normal rate.

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Expert:  bigduckontax replied 5 months ago.

Thank you for your support.

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