How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask taxadvisor.uk Your Own Question

taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4715
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

Should I pay the additional 3% SDLT levy when buying a new

Customer Question

Should I pay the additional 3% SDLT levy when buying a new main residence as I am currently renting my main residence but own a buy to let?
Submitted: 1 month ago.
Category: Tax
Customer: replied 1 month ago.
I previously bought a main residence in 2000 and sold it in 2005. I then bought a new main residence in 2005, lived in it for 18 months, moved out and started renting it to tenants from 2007 onwards.I currently live in a rental property with my wife. She owned her main residence from 2006 until 2013, when she moved out and starting renting it out to tenants. She sold this property earlier this year (March 2016).
Expert:  taxadvisor.uk replied 1 month ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Expert:  taxadvisor.uk replied 1 month ago.

Thank you for your question

There are four conditions that have to be met for the higher rate to apply.

In my view you will not meet Condition D i.e. the dwelling being purchased is not replacing the purchaser’s only or main residence and therefore the extra 3% stamp duty will not apply.

This is more explained under "For the purposes of Condition D, there are two parts to a replacement of a purchaser’s main residence:" here

http://www.olswang.com/articles/2016/03/hmrc-issues-guidance-on-the-extra-3-stamp-duty-land-tax-for-additional-residential-properties/

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 month ago.
Many thanks for your response. I've been sent the attached document by our solicitor who's highlighted the flowchart on page 2 - it says 'Is the property being purchased replacing your main residence (which is being sold)' . As we're not selling our main residence (because we can't as our current main residence is a rental property), this suggests the higher rate does apply? Does condition D supersede this? Apologies for the confusion, it's just that we've seen and heard so much differing advice on this.
Expert:  taxadvisor.uk replied 1 month ago.

Thank you for your reply. In my view condition d should apply

This may be relevant and you may wish to bear this in mind in the event 3% stamp duty is applicable ..

However, the additional tax paid as a result of the transaction can be reclaimed by amending the return for the purchase if in the subsequent three years after the purchase, the purchaser sells a previous main residence thereby replacing the main residence. The previous main residence must have been the main residence of the purchaser at some time during the three years before the purchase of the new main residence. There is also a replacement of a main residence if in the subsequent three years after the purchase, the purchaser’s spouse or civil partner sells a previous main residence. The previous main residence must have been the main residence of the purchaser at some time during the three years before the purchase of the new main residence.

To overcome the hurdle, you may wish to sell your property that was your main residence at some point and reclaim the extra 3% stamp duty and purchase a second property at a lower price to mitigate extra 3% stamp duty.

I hope this is helpful.

Please only rate my answer if it is acceptable.

Expert:  taxadvisor.uk replied 1 month ago.

Your wife has sold her residence that was her main residence until she moved out to a rented property.

Customer: replied 1 month ago.
Many thanks for your response. Does our liability for the extra 3% change if the rental contract for our current main residence doesn't end on the day of purchase but, instead, ends one or two weeks after the purchase (completion) date for our new main residence, or would it be the date we move out of our main residence if it's a rental property?
Expert:  taxadvisor.uk replied 1 month ago.

Thank you for your reply..

The previous main residence must have been the main residence of the purchaser at some time during the three years before the purchase of the new main residence .. its the move out date.

I hope this is helpful.

Customer: replied 1 month ago.
Thanks again. I understand from our solicitor that if we declare that we're not liable for the additional 3% but, in the future, HMRC decide that we are, they could choose to penalise us for not having paid the surcharge (in addition to recovering the additional 3% owed). Is there anything we can do at this stage to protect us from any future penalties like this eg by being able to prove we took advice etc?
Expert:  taxadvisor.uk replied 1 month ago.

Thank you for your reply.

I am sorry for the delay in my response as I was away from my desk.

You may wish to call the technical helpline at HMRC to clarify the position to alleviate any concerns.

I hope this is helpful.

Customer: replied 1 month ago.
Hi, I've just spoken to HMRC on their helpline and they think that we are liable for the extra 3%. I've also been directed to their guidance note of 16 March: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdfSpecifically, on page 24, Q2:Q2. I currently live in rented accommodation but own a property that is rented out. I
am now looking to purchase my first home, for me and my family to live in. Will I
have to pay the higher rates of SDLT on this purchase?
A2. Yes, the higher rates of SDLT will apply as following the purchase you will own an
additional residential property (and will not have replaced your main residence, i.e.
sold a current main residence and purchased a new one).This suggests that I am liable for the extra 3% as I'm technically not replacing my main residence so I do meet condition D?
Expert:  taxadvisor.uk replied 1 month ago.

Thank you for your reply.

I am glad you have got this clarified.

Please don't rate my answer and seek a refund of deposit paid.

Many thanks.

Customer: replied 1 month ago.
Will do, thanks.
Expert:  taxadvisor.uk replied 1 month ago.

Many thanks.

Best wishes

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    6894
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Last | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    6894
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    1772
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    464
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2596
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    268
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions