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I own a house on the south coast. My partner owns a flat in London with her sister. Her sister lives in the flat and the other room is rented out. My partner has lived with me for 18 months and is registered to vote at our house and works nearby. If we want to buy a house together by selling my house but not selling the flat she owns with her sister will we have to pay the 3% stamp duty land tax (SDLT) surcharge for her owning a second property. I am hoping that the house we live in together somehow counts as her main residence.

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    Has your partner ever owned (or part-owned) her main residence? If so, did she sell it and when did she sell it? When do you expect to complete on the purchase of the house you are buying? – Mike Scott Sep 7 '18 at 11:36
  • The only property she has ever had an interest is the flat she still owns with her sister. She did live in that property for a year before moving into my house. The house purchase is currently purely theoretical. – SlimCheney Sep 7 '18 at 16:55
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Summary: Depending on your legal status with your partner, you may or may not need to pay the 3% SDLT surcharge.

HMRC clarified the situation via a series of examples. I believe either example 1 or 2 apply to your case:

Example 1

Mr and Mrs S, a married couple, each own a residential property, with neither having any interest in the other’s property. They both live in the property owned by Mrs S: the property owned by Mr S is rented out. Mrs S is selling her property and they are jointly purchasing a new one, which will be their new main residence. Mr S will retain his rented out property.

The higher rates will not apply to the joint purchase by Mr and Mrs S of a new main residence. As they are married and have both lived in the property owned by Mrs S as their main residence they will both be treated as replacing their main residence.

Example 2

Mr P and Ms B, who are not married to one another, each own a residential property, with neither having any interest in the other’s property. They both live in the property owned by Ms B: the property owned by Mr P is rented out. Ms B is selling her property and they are jointly purchasing a new one, which will be their new main residence. Mr P will retain his rented out property.

The higher rates will apply to the joint purchase of a new main residence by Mr P and Ms B. As they are not married (or in a civil partnership) Mr P will not be treated as replacing his main residence as, even though he has been living in the property owned by Ms B, he has no interest in the property Ms B is selling.

The silver lining is that if you are charged the extra 3% SDLT, you and your partner might be eligible to claim back the 3% difference if both of you have sold your respective (share of) properties within three years of this purchase.

  • Uh oh, sounds like we might need to get married....although that might be more expensive than the 15,000 stamp duty saving. – SlimCheney Sep 7 '18 at 16:53

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