SDLT on Main Residence

First main residence (renter) who also owns investment properties

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I can't find an example of this in HMRC's guidance, so thought I would ask here.

A client who has rented their main residence for the last 10 years is finally looking to get on the property ladder. The issue is that they inherited two rental properties from a relative 5 years ago, which are not in the area they reside. Becuase they own property and aren't selling a previous main residence, they are paying the surcharge on SDLT.

I think this is the way the rule is applied, but wanted to check if anyone has come across this before and knows if it's correct that they must pay the SDLT surcharge despite moving from one main residence (rented) to another (owned).

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By FactChecker
11th Apr 2024 18:44

The 'SDLT surcharge' has absolutely nothing to do with residency ... it's the 'extra' higher rate charge which is based on *ownership* of more than one property (even if that ownership is only part of some of those properties).

That's a bit over simplistic - there are some 'variations' such as:
* "You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold" - a bit obvious since that means you only owned 1 property at any time. BUT if you have not sold your main residence on the day you complete your new purchase (and so pay the higher rate because you own 2 properties), you can apply for a refund if you sell your previous main home within 36 months of buying the 2nd one.
* There is also a possibility, not related to the higher rate, of claiming a discount (bigger band of zero rate) if the property you are buying is your first home - subject to certain conditions.

If your client wants to know more specific to their circumstances then they should seek professional advice ... but on the (limited) info provided here I'd not expect happy news.

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Replying to FactChecker:
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By Taxguy96
12th Apr 2024 14:04

Just to point out that just because you have sold your main residence that doesnt mean you only have 1 property at any one time e.g. you own a main residence + rental property, you sell your main residence (whilst still owning a rental) and acquire another - you would consistently own 2 properties but not pay the additional 3% on your new main residence.

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