Is it possible to avoid paying additional stamp duty on a second home?
My wife and I are looking to buy a new home, but we are struggling to sell our current home.
We have decided to keep it as a rental investment rather than taking an extra 10% off the asking price as we have enough funds to put down a deposit on another property without having to sell.
We are however concerned that this will require us to pay the additional 3% stamp duty surcharge on the new house.
The house we are buying is worth £350,000 so stamp duty will cost us an additional £10,500 if we sell and move.
Is there a stamp duty exemption when buying a primary residence, and if not, does it make financial sense to keep our current home? (by email)
It’s Ed Magnus from Money: It’s a good deal not having to sell your current house to buy a new one.
Nevertheless, given the financial implications of owning a second home, you need to make an informed decision.
Stamp duty rates are calculated as a percentage of the purchase price, which varies depending on the value of the property.
You won’t have to pay stamp duty if you only own one property worth up to £125,000.
You will be charged 2% on the part of the purchase price between £125,000 and £250,000, and 5% on the part of the purchase price between £250,000 and £925,000.
However, as a second owner, you will be subject to an additional stamp duty surcharge of 3%.
If you keep the house you buy for £350,000, stamp duty will cost you £18,000, compared to £7,500 if you sell and move.
To find out if there are any tax exemptions, we spoke with Nigel May, a tax partner at MHA MacIntyre Hudson.
Karen Noye, mortgage expert at wealth management firm Quilter, talked to us about the implications of keeping the current home as a rental property.
Nigel May responds: The surtax applies to all residential property purchases, unless you qualify for the principal residence exemption.
The reader appears to be attempting to keep their current primary residence as a buy-to-let and move…
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