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Searched the forums, and read a lot of the posts, but couldn't find my simple one line question - so here I am!
Keen to avoid the 3% SDLT surcharge. But the property I want to see, I currently let out. If I move there, and live in it on a BTL mortgage (I would skip telling mortgage lender), and then sell after 6 months of it being our principal residence, does that work out? I worried that maybe they would say we were living in it, on a BTL mortgage, and therefore it did not count living there for six months as principal residence.
The 3% stamp duty is what you pay extra on buying a second home but you seem to be talking about capital gains tax on selling a second home?
Read this https://www.gov.uk/government/publicatio...ef-2017--2
If you mean you want to sell that property and be classed as using the proceeds to buy your principal residence, read this https://www.stampdutycalculator.org.uk/s...-homes.htm
The mortgage type is irrelevant for cgt or SDLT. I agree with Debra that I think you mean cgt. Your plan will not solve cgt only reduce it (and even then perhaps not at all). For SDLT you need first to be buying somewhere and selling you main home (not defined the same as CGT).
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
Many thanks for the replies!
Sorry, my message was not clear. Only SDLT, not CGT.
Yes, I hope to move into BTL, live there for a while, make it my principal private residence, then choose a new property to buy to live in. Sell that former BTL (that I am living in).
eg if it costs £700k, I would have a £46k SDLT bill on the new property.. But if I move into my BTL property, and then sell that later, when I buy my new residence, I would only have a £25k SDLT bill! Still a lot, but £21k saving.
I hope I would not need to pay much CGT on the sale of my principal
There are two issues with your proposal. Firstly simply moving into a BTL residence you own and claiming it as your main residence may not work. The reason for this is that HMRC can always challenge, and they do, claims for main residence relief. It is important for you to show that the residence was truly intended to be your main residence so things like notifying HMRC of the change as well as notifying your Mortgage provider, DVLA Swansea, Doctors Schools and just about anything else in your life would be important. HMRC have challenged, and won, against people who have claimed a property as their main residence where they have only lived in it for a short period of time. The Courts now apply a test of whether there was a true intent for the property to be a genuine main residence and if they decide there isn't then the taxpayer loses..
Secondly you have posted on Social Media your intent to not only try to avoid the additional SDLT but in true terms evade it. HMRC have a department following Social Media posts (they help HMRC with investigating taxpayers) so you have probably just told them what you intend to do.
Nigel Reynolds FCCA CMgr FCMI
Property Tax Specialist
Reynolds and Co
Nigel, do you know how many cases were challenged by HMRC in 18/19 ?
How many HMRC challenged cases were won in 18/19 ?
Yes, as I said, making it our home, which includes all those boring address and GP changes. To be honest, we'd need to refurb it. Who knows, we might stay there (especially if can't get a mortgage to move!)
if you fit within this https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812 it'll work
Director of Tax Peplows Limited
CTA ACA FCCA
Thank you Debbie
Hello! Thank you again for all the replies so far. We're looking into if a Declaration of Trust with a beneficial interest. This is just for CGT (if we ever sold it!), it is good as my partner doesn't need to be on the mortgage (partner can't get a mortgage due to not yet permanent residency in UK). Has anyone experience with Declaration of Trust with a beneficial interest?