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Could you be liable to pay the higher rate of Stamp Duty Land Tax?
The higher rate of Stamp Duty Land Tax
The higher rate of Stamp Duty Land Tax (SDLT) is payable on purchases of a property, if at the time of purchasing, you already own one residential property.
The higher rate begins at 3% and increases in accordance with the property value.
If you are purchasing a new home and selling your existing home the timing of the two can have an impact on whether you are liable to pay the higher rate of SDLT. In an ideal world the two transactions would run simultaneously, resulting in owning just one property at one time. However it is not always possible to time the transactions for your sale and purchase to coincide.
If this is the case, you may purchase your new home before the sale of your old property has completed. This results in owning two properties at the time of purchase and therefore you would be liable to pay the higher rate of SDLT.
The Government recognises that the timing of a sale and purchase cannot always coincide and do allow you to apply for a refund on the higher rate of SDLT which you have paid. You must apply for a refund to HMRC within 3 months of the sale of your previous main residence or within 12 months of the filing date of the return relating to your purchase (whichever is latest).
The form which is available online requests the following information:
- The seller’s name and contact details.
- The buyer’s name and contact details.
- The property which you have purchased as your new main residence.
- The property which you have sold as your previous main residence.
- The date of purchase (the completion date).
- The SDLT unique transaction reference number (this is obtained when filing your SDLT).
- The amount of tax paid when purchasing your new main residence.
- The amount which you are requesting to be refunded.
The refund is calculated by taking the amount of SDLT which you have paid, minus the amount of SDLT which you should have paid.
The refund can be requested by yourself or by an agent acting on your behalf.
It’s useful to note you cannot save the online form and so must have all the information you need ready before you begin.
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