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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15976
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Re Principal private residence , My wife and I have

Customer Question

Re Principal private residence
My wife and I have lived in Yorkshire for 20 plus years.
We inherited a house in Sussex and over the last 5 years we spend much more time there than Yorkshire as we give support to family.
As this situation will continue in the long term we would like to swap the election of principal residence to Sussex.
We are presently trying to sell the existing Sussex house and buy a smaller place as we are now in our seventies.As things stand at the moment I guess this purchase would be deemed as a second home and thus attract higher duty charges on the transaction.
Can we elect the new house as our principal residence and thus avoid the duty payable for second homes?
We appreciate of course that the sale of the old house in Sussex will be subject to capital gains tax.
G Holyfield
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Let me take a look at this and I'll get back to you.
Expert:  TonyTax replied 1 year ago.
Whether you are liable for the 3% SDLT charge is based on whether you are replacing your main home and, if so, whether the previous main home will be sold within 18 months of the purchase of a new main home.You have two years from the date your combination of homes changes to elect for one of your homes to be treated as your main home from that point so you cannot elect for the current Sussex property to be treated as your principle private residence for CGT purposes for the first time now. In any event, even if such an election existed, it would not apply for SDLT purposes and the 3% increase. The government has decided that for SDLT purposes, where more than one home is owned, the determination of which of those homes is the main one for SDLT purposes anf the 3% increase will be based on the facts and an election cannot be made as it can for CGT purposes. See paragraph 2.8 here for the criteria used to make such a determination. Based on what you have told me, you may be able to claim that the existing Sussex house is your main home for the purposes of SDLT and, therefore, avoid the 3% increase but as it says in paragraph 2.8 of the document, the facts will determine whether such a claim will be successful or not. If it was determined that the Yorkshire house was your main home for SDLT purposes, then you would have 18 months to sell it to qualify for a refund of the 3% SDLT increase on the new Sussex purchase but, reading between the lines, I'm guessing you don't intend to sell the Yorkshire property. You might also refer to Examples 7, 8 and 14 of the HMRC document on the SDLT increase. I hope this helps but let me know if you have any further questions.