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HMRC internal manual

Stamp Duty Land Tax Manual

SDLT - higher rates for additional dwellings: Condition D - further examples

Example 1

Mr and Mrs S, a married couple, each own a residential property, with neither having any interest in the other’s property.  They both live in the property owned by Mrs S: the property owned by Mr S is rented out. Mrs S is selling her property and they are jointly purchasing a new one, which will be their new main residence.  Mr S will retain his rented out property. 

The higher rates will not apply to the joint purchase by Mr and Mrs S of a new main residence.  As they are married and have both lived in the property owned by Mrs S as their main residence they will both be treated as replacing their main residence.  

Example 2 

Mr P and Ms B, who are not married to one another, each own a residential property, with neither having any interest in the other’s property.   They both live in the property owned by Ms B:  the property owned by Mr P is rented out.  Ms B is selling her property and they are jointly purchasing a new one, which will be their new main residence.  Mr P will retain his rented out property.

The higher rates will apply to the joint purchase of a new main residence by Mr P and Ms B.  As they are not married (or in a civil partnership) Mr P will not be treated as replacing his main residence as, even though he has been living in the property owned by Ms B,  he has no interest in the property Ms B is selling. 

Example 3 

Mr T owns both a main residence and a buy-to-let property.  He is in the process of purchasing a new main residence.  He intends to keep his current main residence and rent it and sell his buy-to-let property, although the sale may not take place until after the purchase of his new property. 

The higher rates will apply to the purchase of the new property as following the purchase

Mr T will own an additional residential property and is not replacing his main residence. 

Mr T will not be able to claim a refund when he sells his current buy-to-let property as refunds are only available where a previous main residence has been replaced.

Example 4 

Ms G currently owns two buy-to-let properties, which she has owned for a number of years.  She sold her previous main residence six months ago and moved temporarily into one of her buy-to-let properties, whilst looking for a new main residence.  

Ms G will be treated as replacing her main residence if the property she sold six months ago was her only or main residence and completion occurred on or before 26 November 2018.  The fact that she lived in one of her buy-to-let properties in the interim period does not affect this.

Example 5 

Mr & Mrs C currently own a mixed use property, a shop with a flat above, both of which are rented out.  They currently live in rented accommodation but are in the process of purchasing a new property which will be their main residence.  

The higher rates will apply to the purchase by Mr and Mrs C as they already own an interest in another residential property: the flat above the shop.

Example 6 

Ms D currently owns two residential properties – her main residence and a 25% share in a second property that she owns jointly with 3 friends, each having a 25% share in the property.  Ms D now wishes to purchase one of her friend’s 25% share in the jointly owned property. 

The higher rates will apply, as Ms D will be purchasing a major interest in a property, is not replacing her main residence and owns an interest in another property.

Example 7 

Miss L owns two residential properties – a buy-to-let and a 50% share in a property that she owns jointly with her sister.  The jointly owned property is her main residence.  She is considering purchasing the remaining 50% of her main residence from her sister. 

For purchases before 22 November 2017, the higher rates would apply as Miss L is purchasing a major interest in a residential property, is not replacing her main residence and owns an interest in another residential property.

For purchases on and after 22 November 2017, the higher rates would not apply as Miss L’s transaction will be disregarded because she is increasing her interest in her main residence - see SDLTM09814 for conditions.  [Para 7A].  

Example 8

Mr and Mrs X jointly own two properties; they live in one as their main residence and rent the other out.   Mr X is transferring his share in their main residence to his wife, who will take over sole responsibility for the mortgage.  

For purchases before 22 November 2017, the higher rates will apply as Mrs X owns an interest in another residential property and is not replacing her main residence.  The higher rates will apply to the value of the mortgage taken over by Mrs X.

For purchases on and after 22 November 2017, the higher rates would not apply as MrsX’s transaction will be disregarded because she is purchasing solely from her spouse - see SDLTM09820 for conditions.  [Para 9A].  

Example 9

Ms Q is purchasing the house next door to her current home, which she intends to merge with her current home.  

The higher rates will apply as following the purchase Ms Q will own an additional residential property and is not replacing her main residence.  A refund of the higher rates cannot be claimed once the work to merge the two properties is complete as refunds are only available where a previous main residence has been replaced.    

Example 10 

Mr E owns two properties, both flats: he lives in one and rents out the other.  He is currently in the process of extending the lease on his main residence.  

For purchases before 22 November 2017, the higher rates would apply as Mr E is purchasing a major interest in a residential property, is not replacing his main residence and owns an interest in another residential property.

For purchases on and after 22 November 2017, the higher rates would not apply as Mr E’s transaction will be disregarded because he is increasing his interest in his main residence - see SDLTM09814 for conditions.  [Para 7A].  

Example 11

Mr K currently owns one buy-to-let property and is in the process of purchasing another one.  He lives in rented accommodation.  He may consider selling one of the properties within the next couple of years. 

The higher rates will apply to the purchase of the second buy-to-let property as following the purchase Mr B will own an additional residential property and is not replacing his main residence.  A refund will not be available if Mr K subsequently sells one of his buy-to-let properties as a refund is only available where a main residence has been replaced.  

Example 12

Miss M has just returned to the UK after working abroad for a number of years and is in the process of purchasing a new home, which she hopes to complete on or by the end of October 2018.  She sold her previous main residence in 2009, before moving abroad, but retained a buy-to-let property in the UK.   Miss M lived in rented accommodation while abroad.

Provided Miss M purchases her new main residence on or before 26 November 2018, and has not acquired another main residence in the interim period, she will be treated as replacing her main residence and the higher rates will not apply.