Flip through 3% stamp duty?

[centurian]

Okay, I finally see what you are up to. The answer is "probably, but..."

a) You would need to show you had made two house moves (council tax, utility bills etc.). Quite a bit of hassle.
b) Your credit rating would get hit with having so many house moves in a short period
b) You don't know what the HMRC rules will be around this - which might mean it has to be your primary residence for a minimum period (*) they deliberately have a bit of vagueness in them, so that they can expand the scope to deal with tricks like this.
c) It's the conveyancing solicitor that has to make the returns. If they smell a rat, they may refuse to register the sale
d) You may lose money on the £40K house - you must sell it, so you'll be forced to take
e) It's another chain which can collapse, so more expenses

(*) - I don't know why HMRC don't do this anyway for stuff like CGT - you must live in a property for at least 6 or 12 months etc.

[SlipTheJab]

Is the three percent stamp duty on extra houses anything to worry about? I had a quick look at the rules and it seems like you can just flip your "main home" MP-style and almost completely avoid it.

For example if you are a buy-to-letter with a portfolio of half a dozen London flats and you want to spend 700,000 on another one. Instead of paying an extra (ouch) 21,000 stamp duty, can you just buy your "main" home in some godforsaken place (Wales?) where they cost 21,000. Then you move there for a couple of weeks, then buy the BTL, sell the flip-house for a nice profit, and you are the proud owner of another BTL without paying any extra tax.

Is this how it works?

Who do you think you are? an MP?

[hugebrain]

No, that would only work if you only had one home (that one being your prime residence).

So, even if you have only one BTL, and one primary residence, if you sell one of them and buy a new primary residence, that new primary residence is STILL a second home and you will still pay the higher SDLT.

I'm not sure if I'm being thick (my username is a bit of a lie) or you are just winding me up or what. Why do you guys keep saying I can't do this while at the time posting links to articles that say I can?

So, i'll try one more time. Imagine I'm a buy-to-letter with a nice rental portfolio I want to expand. I also own my own home.

Where in this sequence do I have to pay (and not be able to claim back) the extra 3% tax? ELI5 because I don't get what you've been trying to tell me so far. Tell me which step doesn't work and why...

1. I buy a house for 30,000 pounds. (Link says it less than 40,000 I don't have to pay the 3% stamp duty).

2. I move into it as my main home. (No stamp duty on moving)

3. I buy a million pound house and move there, whilst simultaneously selling the 30,000 pound house. (According to the flow chart I own more than two houses, but since I am selling my main home and replacing it with a new one, I don't have to pay the 3% tax.)

4. I decide to move back to my original home and rent out the million pound house (no stamp duty on moving).

???

[gables]

No, that would only work if you only had one home (that one being your prime residence).

So, even if you have only one BTL, and one primary residence, if you sell one of them and buy a new primary residence, that new primary residence is STILL a second home and you will still pay the higher SDLT.

This ^^

[Syntyrion]

No, that would only work if you only had one home (that one being your prime residence).

So, even if you have only one BTL, and one primary residence, if you sell one of them and buy a new primary residence, that new primary residence is STILL a second home and you will still pay the higher SDLT.

[hugebrain]

As I understood it one would need to actually sell previous property within 18 months to claim a refund, merely buying more expensive house and making it primary residence (while keeping cheaper houses bought before which were primary residences) won't be OK.

That's the point of the cheap flipper house. I pay 3% stamp duty on that. (Edit: as long as the flipper costs < 40,000 I don't have to pay that either) Then I move into it as my main house. Then when I buy the new house I'm selling my main house so there's no extra stamp duty to pay. If necessary, I can move into the new main house for a week or two before I let it out, but I'm not sure if that's required or not.

[JB3000]

As I understood it one would need to actually sell previous property within 18 months to claim a refund, merely buying more expensive house and making it primary residence (while keeping cheaper houses bought before which were primary residences) won't be OK.

+1

[AtW]

No, I still don't think that works. Look at the flowchart. If you own a portfolio, then any property you buy is subject to the charge, unless it is replacing your primary residence.

As I understood it one would need to actually sell previous property within 18 months to claim a refund, merely buying more expensive house and making it primary residence (while keeping cheaper houses bought before which were primary residences) won't be OK.

[centurian]

No, I still don't think that works. Look at the flowchart. If you own a portfolio, then any property you buy is subject to the charge, unless it is replacing your primary residence.

That means, you have to move into it that property. So the 700K property has to become your primary residence at the point you buy it. Adding in the property in the back of beyond doesn't help.

[hugebrain]

Nope...

What you must know about new stamp duty on buy-to-let and second homes | This is Money

That's what I thought. I have to pay the 3% on the cheap "flipper" house which becomes my main home. However, I don't have to pay any extra stamp duty on the expensive house I really wanted to buy in the first place as long as I unload the flipper within eighteen months.

???

I guess you mean I have to pay it and claim it back straight away from HMRC.

[centurian]

Nope...

What you must know about new stamp duty on buy-to-let and second homes | This is Money

The Treasury is being pretty strict on the definition of a main residence when it comes to the extra stamp duty charge.

If you buy a second property you will always have to pay the higher rate of stamp duty, even if you plan to live in it and rent out your old one.

If you keep your old home at the time of completion you will need to pay the extra stamp duty charges, even if you move into a new main residence.

The only leeway is that you can get a refund of the stamp duty if you sell your old property within 18 months. This aims to help those who may hit delays in the selling process.

You will need to apply for the refund through HMRC.

[hugebrain]

Is the three percent stamp duty on extra houses anything to worry about? I had a quick look at the rules and it seems like you can just flip your "main home" MP-style and almost completely avoid it.

For example if you are a buy-to-letter with a portfolio of half a dozen London flats and you want to spend 700,000 on another one. Instead of paying an extra (ouch) 21,000 stamp duty, can you just buy your "main" home in some godforsaken place (Wales?) where they cost 21,000. Then you move there for a couple of weeks, then buy the BTL, sell the flip-house for a nice profit, and you are the proud owner of another BTL without paying any extra tax.

Is this how it works?