From 1 April 2016 higher rates of SDLT are charged on purchases of additional residential properties. The main target of the higher rates is purchases of buy to let properties or second homes.
However, there will be some purchasers who will have to pay the additional charge even though the property purchased will not be a buy to let or a second home. Such as, those who buy a property before selling their previous property, or perhaps those going through a divorce and separation of assets.
The 36 month rules set out below will help to remove some transactions from the additional rates (or allow a refund).
Care will be needed if you already own, or partly own, a property and transact to purchase another property without having disposed of the first property.
When does the additional stamp duty apply?
The higher rates are three percentage points above the normal SDLT rates. The higher rates potentially apply if, at the end of the day of the purchase transaction, the individual owns two or more residential properties.
However:
- if a new main residence is purchased before disposing of a previous main residence the higher rate will be payable. They then have 36 months to dispose of their previous main residence and claim a refund.
- purchasers will also have 36 months between selling a main residence and replacing it with another main residence without having to pay the higher rates.
- a small share in a property which has been inherited within the 36 months prior to a transaction will not be considered as an additional property when applying the higher rates.
Apply for a repayment of the higher rates for additional properties
The online refund process will allow those affected to apply for a repayment of the higher rate of SDLT if the property sold was a previous main home.
You can access the government’s online service via www.gov.uk here.
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