Stamp Duty Land Tax (SDLT) on second properties
Most people will have heard by now that, from April, there is to be a 3% surcharge on anyone buying a second property. There are a few exceptions to this charge, particularly relating to replacing your main residence. In essence, if you replace your main residence, you will not be subject to the 3% charge, even if you already have another property. In cases where you have not sold your old home before buying the new one, you will be subject to the additional 3% charge. In such cases, if you then sell your old home within 18 months of buying the new one, you will be able to reclaim the additional SDLT.
The use of the term main residence brings into mind the term as it is used for CGT purposes. In practical terms, the main residence will be the same. Unlike with CGT though, you will not be able to make an election to treat a specific property as your main residence. This lack of certainty in some cases will inevitably lead to more anxiety for the taxpayer as the question of which property is your main residence is not always easy to determine. For example, if you own a property in London near to your work, but stay in your home in Devon at the weekends, which is your main residence?
Sadly, this new surcharge for SDLT will only lead to more complexity in the tax system.