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The Accountants for Growth

Complexities of main residence v second home for higher rate stamp duty

Complexities of main residence v second home for higher rate stamp duty
Imagine a married couple own a house in Birmingham and one in Llandudno. They have nominated the Llandudno property as their principal private residence. They both spend three or four nights in Birmingham during the week as it is close to their respective work.

They are looking to buy a flat in Birmingham and sell their house in the area. By nominating the property in north Wales as the main residence does this mean that they will pay an additional 3% stamp duty land tax on their new flat in Birmingham?

Currently stamp duty is charged at an additional 3% where a property is purchased which is not replacing the old main residence.

Firstly, the election of the Llandudno property as the couple's principal private residence is an election for capital gains tax and not stamp duty purposes.

With stamp duty, the couple do not have the option to choose a main residence, so if the Llandudno property is determined to be the husband's main residence then the purchase of a replacement flat in Birmingham will be charged at the additional 3% as it will not be a replacement of a main residence for both joint purchasers.

There is no statutory definition of ‘main residence’. Whether the Llandudno or Birmingham properties qualify as the main residence depends on how the individuals reside in them and HMRC have provided a list of indicators for taxpayers to use to establish their main residence.

If you face circumstances similar to this case study then our advice is seek professional guidance from your advisors before entering into any transaction.
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