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Find out more'Will we be hit by extra stamp duty?'
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My wife and I are buying a second property in England, with a view to selling our existing home in two years’ time and moving into the second property.
In the meantime, we plan to rent out the new property.
What will be the stamp duty charges for this transaction?
Steve, Essex
'You might be doing this the wrong way round'
Mike Croxford, Which? money expert, says…
There is a way you can reduce tax here – but it runs in the opposite direction to your plans.
If you go from owning one property to two, even temporarily, then you’ll pay the higher rate of stamp duty land tax.
This is 5% on the entire value of the property in England and Northern Ireland. It’s also up to 5% in Wales, while in Scotland it’s 8%. This is on top of the usual stamp duty rates, which also vary by nation.
A key condition is that you must move into the new property straightaway and make it your main residence
To take the average UK house price of £269,000, you’d pay stamp duty of £14,400, as your second home is in England. This is £10,950 more than if the property was your main home (4% of the price).
You can reclaim this higher rate under certain circumstances. But a key condition is that you must move into the new property straightaway and make it your main residence – the reverse of your plans.
If you were to change your plans, you could move into your new property, then hang onto and even rent out your original home, as long as it is sold within three years. You then have 12 months to reclaim the extra stamp duty.
- Work out your bill using our Stamp duty calculator
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