The additional 3% Stamp Duty Land Tax surcharge has been implemented since 1 April 2016. Therefore, if you own more than one residential property then you have to pay 3% more stamp duty than would be applicable based on normal rates.
There are various scenarios that require careful planning to avoid paying the additional 3% SDLT. Here are some examples:
Sarah owns a buy-to-let property, then buys a property to live in.
- The 3% SDLT surcharge applies. This is because at the end of the day of transaction, she will own two properties.
Marie owns 15 properties. She then buys a main house to live, in replacement of her previously owned private residence.
- The 3% SDLT surcharge does not apply as she has replaced her main residence. This exemption only applies to replacement private residences and not to first time purchasers.
- If Marie moves out of her previous main residence but keeps it and then buys her new main residence, she will have to pay the 3% Stamp Duty surcharge. However, as long as she sells her previous main residence within 3 years of completing the purchase, HMRC will make a refund.
Rosie and Mylo wanted to buy a house to live in jointly. Mylo doesn’t own any other properties but Rosie owns a buy-to-let property.
- The 3% SDLT applies in full. Some would think that there will be only a 1.5% surcharge, however the full 3% applies. This is because for Rosie, this will be an additional property. At the end of the day of the transaction, she will own two properties and is not replacing a main residence.
Kerry owns various properties jointly with her sister. She then buys her first main residence for £1m, prior to that she was renting.
- The 3% SDLT does not apply. This is because the properties are owned jointly and therefore she doesn’t hold the major interest in the properties which is required by the legislation.