Stamp Duty Land Tax (3% SDLT) - Nova

Stamp Duty Land Tax (3% SDLT)

Property TV | Property Question Time – Ep 114 – Stamp Duty Land Tax (3% SDLT)

Jo Grimwood:                    So I’m actually going to start with a question for you, Paul. “I am looking at my options to moving house to be in the catchment area of a secondary school. I own my home, mortgage-free and another buy-to-let property with a large mortgage on it. I’m considering selling the buy-to-let property and taking out a new buy-to-let mortgage on my present home to pay for the new home. As much as I’m aware, if I was to sell my home and buy a new one or even rent a home for a year or two and then buy a new home, I wouldn’t be liable for the additional 3% SDLT, but I can’t work out if I’d be liable for it if I were to sell my existing buy-to-let, but keep ownership of my home and turn it into a buy-to-let.”

Paul Mahoney:                  Okay. The way that the 3% stamp duty premium rules are written, is it doesn’t matter whether it’s a buy-to-let or a home. It’s any second or subsequent purchase. So even if they were to sell the buy-to-let and turn their current home into a buy-to-let, in buying that second property, acquiring that second property, they would be liable for the extra 3%. So their understanding is a little bit wrong there because they would pay the 3% on the subsequent purchase.

There’s various things they could look at doing there. Assuming they really want to keep their current home and that current home makes sense as a buy-to-let, as a property investment as opposed to the place that they bought to live in, they could move that into a limited company. They would pay 3% on that movement or change of ownership but not on the subsequent purchase. That would only really make sense if the subsequent purchase was at a higher value because then they’d be saving themselves on that one as opposed to the one that they own.

They could take a buy-to-let mortgage on their existing home to allow them to buy the new property. Given they own that debt-free currently, they could do that before or after moving it into a company, if that’s what they were going to do, to release the funds. In doing so, they would be an accidental landlord in the eyes of lenders, so that does limit them a little bit or it makes the mortgage what’s considered a consumer buy-to-let, and so there’s more boxes to tick, less products available. So that’s something worth considering as well.

I suppose as with a lot of the questions that we get on this show, we’re presented with limited information, so what’s important is for them to have a very clear picture of what all the information is and speak with a professional who can advise them on what all of their options are and what works best for what they’re trying to achieve.

Jo Grimwood:                    So do your research. Very important.

FAQs

Is Now a Good Time to Invest?
Is Now a Good Time to Invest?
read more
Fees For Buying and Letting Out a Flat
Fees For Buying and Letting Out a Flat
read more
Keep or Sell Your Property
Keep or Sell Your Property
read more
Buy-To-Let Investment
Buy-To-Let Investment
read more
How To Avoid Legal Fees
How To Avoid Legal Fees
read more
Want to be the first to know what’s going on in the world of property investment? Subscribe to our newsletter below.
The property pension plan book icon

Take Control Of Your Future With Buy To Let Investment, get The Property Pension Plan for Free!

Find Out More
Get in Touch

Book a complimentary property and/or finance consultation

back-to-top