Stamp Duty Land Tax

[sretiolc]

My son is selling his house and buying a bigger one. He has to pay £2380 stamp duty. His solicitor has sent him a calculation to pay of £9700. I believe that this is what he would pay if he was buying a second home. Will he have to pay the £9700 now and then claim it back from Hmrc ? He hadn’t accounted for this.

[THECORBYLOON]

Yes, he can reclaim the duty but it must be done within three year for selling his former main residence.

https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties

[sretiolc]

Just to reiterate. I know that he would be able to claim it back but it’s a lot of money for him to pay out when it will not be a second home, it will be his only residence. Is it possible for him to only pay the £2k stamp duty on the house he is buying ?

[bednobs]

how much is the house he's buying?
Why doesnt he just ask the solicitor how she came to that figure because he thinks it's wrong?

[ToraToraTora]

I don't understand, when did they ever refund SD? I thought it was a percentage on the property in a series of bands?

[THECORBYLOON]

If you buy a property in addition to your main residence, a higher rate of duty is due but it's repayable if the former main residence is selt within three year of buying the new main residence.

Google it.

[Buenchico]

>>> when did they ever refund SD?

Sretiolc's point is, TTT, that her son will own two homes up until the point that he's sold his first one. So he'll be charged a higher rate of SDLT on the purchase than if he didn't already own a property.

As Sretiolc is aware, and TLC's link reiterates, when he sells the first property he'll then be able to reclaim the 'second home supplement' on the SDLT that he paid. That's all very well but, of course, he has to be able to fund that higher payment in the first place. Sretiolc is enquiring as to whether it's possible to simply pay a lower amount of SDLT in the first place, rather than to pay the higher amount and then reclaim the difference.

Unfortunately, Sretiolc, that's the way that the system works. He has to pay the second home SDLT within 14 days of completion on the sale. So, unless he's sold his own house by then, he'll have to find the money (possibly by way of a short-term bank loan) to pay that SCDLT in full or risk getting clobbered for a potentially heavy penalty for not doing so.

Sorry!

[ToraToraTora]

ok I see chico, thanks.

[bednobs]

cant you just buy and sell on the same day? isnt that what most people do?

[THECORBYLOON]

You can sell the main residence and buy the new one on the same day but would that not take a bit of luck and organization?

[sretiolc]

Chico, thankyou, exactly my thoughts. Everything is done online now so speaking to people is not so easy, emails keep going back and forth. He has technically sold his house and they should be exchanging contracts on the same day so he won’t own a second property at all. But from what I can tell in his paperwork it looks like the solicitor asks for the SDLT up front and holds it in an account to be paid on completion. That could be only a few weeks - but obviously could drag on. It just seems very unfair on them to have to find it now even though it needn’t be paid in the end
I have advised him to try and speak to the solicitor tomorrow but thought people on here might be able to put his mind at ease tonight. Thankyou for your input

[Peter Pedant]

// You can sell the main residence and buy the new one on the same day//
yeah it is called a chain

The important date is completion. He has two houses if he hasnt completed on house 1 when he completes on house 2. As far as we can all see, then the tax goes up ( until he sells house 1)

technically sold is an unhelpful phrase ( has an offer) meaning "he has sold and not sold at the same time"

I agree inernet isnt helpful as it has a lot about linked purchases and not chains. [ Link doesnt equal chain. Link is when you sell half the house to your father in law and the other half to your niece]

[bednobs]

"You can sell the main residence and buy the new one on the same day but would that not take a bit of luck and organization?"
but isnt that what most people do?
Have i been buying houses wrong my whole life??