The SDLT Supplement and Changing Your Main Residence

Navigating the intricacies of Stamp Duty Land Tax (SDLT) can be daunting, especially when it comes to purchasing additional properties. In England and Northern Ireland, the SDLT supplement applies to second and subsequent residential properties with a purchase price of at least £40,000, increasing the residential rates by 3%. However, there are situations where you can replace your main residence without incurring this supplement. Let’s break it down.

Understanding Your Main Residence

Typically, identifying your main residence is straightforward. For instance, if you live in one house and own two additional properties that you rent out, your primary home is your main residence. But what if you split your time between two or more properties? In such cases, several factors come into play:

  • Where is your family based?
  • Where do your children go to school?
  • Where are you registered to vote?

Interestingly, your main residence might not be where you spend most of your time. For example, if you have a flat in the city for weekdays and a family home where your family lives full-time and you spend weekends, the family home is considered your main residence for SDLT purposes. Remember, your main residence for SDLT might differ from that for capital gains tax.

Exchanging Your Main Home

When you exchange your main home, the SDLT supplement might not apply. If the sale of your old home completes before or at the same time as buying your new home, you’ll be charged the normal residential rates. Easy enough, right?

But what if you buy your new home before selling the old one? In this case, you’ll initially need to pay the SDLT supplement on your new home purchase. However, don’t worry—you can reclaim this supplement once you sell your old main residence, as long as it’s within three years of purchasing the new home. There’s even room for an extension in exceptional circumstances.

Claiming the Refund

To reclaim the SDLT supplement, you need to amend your SDLT return using form SDLT 16. This form shows that the purchase of your new residence is no longer a higher-rate transaction. You must do this within 12 months of selling your previous residence or, if later, within 12 months of the filing date for the SDLT return for your new home. It’s crucial to claim this refund proactively as it won’t be given automatically.

Confused about SDLT and changing your main residence? Jon Davies Accountants can help! Contact Jon and our expert team today for personalised advice and support. Let’s make sure you’re handling your SDLT correctly and efficiently.

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