• Wednesday Mar, 13, 2019

Are You Due A Stamp Duty Refund ?

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Since 1 April 2016 if you purchase an additional property, such as a second home or a buy to let, your purchase will be liable to a higher rate of stamp duty.

Purchase price bandsRate paid on portion of price band
Up to £125,0003%
Between £125,000 and £250,0005%
Between £250,000 and £925,0008%
Between £925,00 and £1.5m13%
Over £1.5m15%

There are four conditions you have to meet for the extra stamp duty charge to take effect

  • The purchase is more than £40,000
  • The purchase is not subject to a lease with more than 21 years to run
  • The purchaser owns a major interest in another dwelling which has a market value of over £40,000 and has more than 21 years to run
  • The dwelling being purchased is not replacing the purchasers only or main residence

Purchases by a company or other non individuals will also be subject to the higher rates if the purchase meets conditions A B and C.
While these rates have been around for over 3 years confusion still surrounds the conditions, particularly D. To help, we’ve created some example where confusion could occur alongside our expert advice to demystify how the conditions apply to real-life situation.

SITUATION 1

Mr and Mrs A are married and each own a residential property. They both live in the property owned by Mrs A whilst the property owned by Mr A is rented out.

Mrs A is selling her property and they are purchasing a new one together which will be their new main residence. Mr A will keep his rented out property.

DO THE HIGHER RATES APPLY?

The higher rates will not apply to the joint purchase by Mr and Mrs A of a new main residence. As they are married and have both lived in the property owned by Mrs A as their main residence they will both be treated as replacing their main residence.
However, if Mr and Mrs A were not married the higher rates would apply. Mr B would be treated as having no interest in the main residence which has been sold even though he was living there.

SITUATION 2

Mr B owns both a main residence and a buy-to-let property. He will be purchasing a new main residence. He will keep his current main residence, rent it and sell his buy-to-let property.

DO THE HIGHER RATES APPLY?

The higher rates will apply to the purchase of the new property as following the purchase Mr B will own an additional residential property and is not replacing his main residence.

SITUATION 3

Mr & Mrs C currently own a mixed use property, a shop with a flat, both of which are rented out. They currently live in rented accommodation but are in the process of purchasing a new property which will be their main residence.

DO THE HIGHER RATES APPLY?

The higher rates will apply to the purchase by Mr and Mrs C as they already own an interest in another residential property: the flat above the shop.

SITUATION 4

Ms D currently owns two residential properties – her main residence and a 25% share in a second property that she owns jointly with 3 friends, each having a 25% share in the property. Ms D now wishes to purchase one of her friend’s 25% share in the jointly owned property.

DO THE HIGHER RATES APPLY?

The higher rates will apply, as Ms D will be purchasing a major interest in a property, is not replacing her main residence and owns an interest in another property.

SITUATION 5

Miss E owns two residential properties – a buy-to-let and a 50% share in another property. The jointly owned property is her main residence. She is considering purchasing the remaining 50% of her main residence.

DO THE HIGHER RATES APPLY?

For purchases before 22 November 2017, the higher rates would apply as Miss E is purchasing a major interest in residential property, is not replacing her main residence, and owns an interest in another residential property.

For purchases on and after 22 November 2017, the higher rates would not apply as Miss E’s as she is increasing her interest in her main residence.

SITUATION 6

Mr and Mrs F jointly own two properties. They live in one as their main residence and rent the other out. Mr F is transferring his share in their main residence to his wife, who will take over sole responsibility for the mortgage.

DO THE HIGHER RATES APPLY?

For purchases before 22 November 2017, the higher rates will apply as Mrs F owns an interest in another residential property and is not replacing her main residence. The higher rates will apply to the value of the mortgage taken over by Mrs F.
For purchases on and after 22 November 2017, the higher rates would not apply as Mrs F’s because she is purchasing solely from her spouse.

SITUATION 7

Ms G is purchasing the house next door to her current home, which she intends to merge with her current home.

DO THE HIGHER RATES APPLY?

The higher rates will apply as following the purchase Ms G will own an additional residential property and is not replacing her main residence.

SITUATION 8

Mr H owns two flats – he lives in one and rents out the other. He is currently in the process of extending the lease on his main residence.

DO THE HIGHER RATES APPLY?

For purchases before 22 November 2017, the higher rates would apply as Mr H is purchasing a major interest in residential property, is not replacing his main residence and owns an interest in another residential property.

For purchases on and after 22 November 2017, the higher rates would not apply as Mr H’s because he is increasing his interest in his main residence.

SITUATION 9

Mr I currently owns one buy-to-let property and is in the process of purchasing another one. He lives in rented accommodation. He may consider selling one of the properties within the next couple of years.

DO THE HIGHER RATES APPLY?

The higher rates will apply to the purchase of the second buy-to-let property as following the purchase Mr I will own an additional residential property and is not replacing his main residence. A refund will not be available if Mr I subsequently sells one of his buy-to-let properties. A refund is only available where a main residence has been replaced.

SITUATION 9

Miss J has just returned to the UK after working abroad for a number of years and is in the process of purchasing a new home, which she hopes to complete on or by the end of October 2018. She sold her previous main residence in 2009, before moving abroad, but retained a buy-to-let property in the UK. Miss J lived in rented accommodation while abroad.

DO THE HIGHER RATES APPLY?

Provided Miss J purchased her new main residence on or before 26 November 2018, and has not acquired another main residence in the interim period, she will be treated as replacing her main residence and the higher rates will not apply.
Refund are available for those have had wrongly paid the extra stamp duty charge. Contact us today to see if you are eligible.

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