I am unclear regarding an upcoming property purchase and our eligibility for a refund of stamp duty land tax (SDLT) from HMRC. The details of our precise circumstances are outlined below. Would we be eligible for a SDLT refund from HMRC if we were to sell our second property within three years after the new main residence purchase?
1. We are currently renting our main residence in Brighton (for the last two years).
2. We also own a different home nearby and have done so since 2006. We lived in this home as our main residence for five years until 2011. Since 2011, we have rented this home, and it is still rented out today.
3. We are purchasing a new home as our main residence.
4. We are unable to sell our previous property in time before the planned sale completion of the new house. Therefore, we understand that we are required to pay the increased SDLT upfront due to owning a second home at the time of sale completion.
5. We are of the understanding that we are eligible for the refund from HMRC for the extra second home SDLT surcharge, if we were to sell the previous property within three years.
Can you please clarify our eligibility for the refund based on the above?
Arthur Weller replies
As you clearly realise, if you sell your owned property first, then purchase the new property so that at the time of the purchase you own no other property, then there will be no extra 5% SDLT charge on the purchase. However, if you do as you propose, you are planning to pay the extra 5% SDLT on the purchase and then claim a refund from HMRC when you sell your old property. If I understand you correctly, the rules don't allow you to do this. If you look at HMRC’s Stamp Duty Land Tax Manual at SDLTM09800, you can see that one of the conditions for claiming a refund is ‘The purchaser must have lived in the old property as the purchaser's only or main residence at some point in the three-year period leading up to the date of the purchase of the new property [Para 3(7) (c)].’ It seems to me that you last lived in your old property as your main residence in 2011, and since then you have rented a property to live in.
