I’m confused so maybe somebody can help…
I bought my first house . House 1.Met my now wife, we needed more room so we bought house 2.
Kept house 1 due to low value, rented it out.
we part exchanged house 2 for a new build. House 3.
Had to pay additional stamp duty becuase we still had house 1.
we have sold house 1 and believed that we could claim the additional stamp duty back if it’s within 3 years (which it is).
However, just reading on the government website that to claim the refund back we had to have sold our previous main residence (which it wasn’t).
Does that mean we can’t claim the additional stamp duty back?
I think that house 2 became your main residence [because you were living in it and renting house 1].
Now you have sold your second home [house 1] I think you're actually due to pay capital gains tax on any profit you made from the sale - difference between the price you paid when you bought it and when you sold it.
Did you pay the higher stamp duty rate when you bought house 2 or 3?
(Because it was a second home if house 1 was your main residence)
TL:DR
You can't have it both ways with 2 houses .... You either pay higher stamp duty when you buy the second one or you pay CG on profits from the sale of the first one.
AFAIA
There are no CG tax to pay … it was sold for less than it was bought for
Higher SD was paid on purchase of house 3.
I suspect CGT may only be due on the gain in value since it ceased to be the OP's main residence (perhaps with some additional exclusionary period). I haven't looked up the rules though.
(edit: crosspost with OP saying no gain anyway)
Then I too am confused!
Shouldn't you have paid higher SD on house 2 also?
House 2 was purchased before the higher stamp duty came into play
[ Here goes the ill-informed ramblings of someone who knows very little about the subject.... but that's the kind of advice you came here for, yes? ]
If house 2 was your main residence, and you sold it to buy house 3, then there would have been no higher SDLT to pay. Doesn't "part exchange" fall into this situation? House 1 is irrelevant, unless you moved into it or it could in some way still appear to be your main residence when you bought house 3.
However, just reading on the government website that to claim the refund back we had to have sold our previous main residence (which it wasn’t).
But it [house 1] must have been your primary residence as you paid extra SD on house 3 - so you should be able to claim the extra SD back.
The awkward bit is that you rented house 1 out - that doesn't match up with it being your primary residence.
As an aside, I don't know how part exchanges work, is there a value put on your original house that's you effectively sell to the house builders at and then you buy the other house at the agreed price?
@sharkbait the reason I am not sure about this is I’d consider house 2 the primary residence when we purchased house 3?
house 1 wasn’t a primary residence - we were not living there.
but when we bought house 3, we had to pay extra stamp Duty because ‘we had another property’ (house 1).
part exchange - yes that’s it. basically they send round a few estate agents to view the house. The agents go back to to the builder with valuations (we don’t know what they are), the builder then makes us an offer.
We accepted the offer. This allows us to crack on with the new build purchase.
We had to do the viewings but as it happened the house had an offer accepted from the first viewing so it worked out well for both parties. Had the house not sold - it wouldnt have been our problem.
Part exchange doesnt effect anything.
You're just selling the house to the developer for convenience (speeds up the transaction and removes the chain)
Stamp duty is a tax paid on the purchase of a property. There are various rates based on the value of the property you're buying. It jumps to 5% if the house is over £250k, 10% if over £950k. (it gets more complicated depending on the dates of the transactions, as theres more tax to pay if you're purchasing a second home, but theres a 3 year window if things slightly overlap)
The only exemptions are if its your first house you've ever purchased and/or under a certain value.
The only time it matters if its your "primary residence" is when you sell, as then its not subject to CGT.
As others have said the only tax payable on the sale of house 1 would have been CGT.
Your conveyancer should have sorted all of this out for you.
The conveyancer did sort it all out. There isn’t an issue with anything on that front.
All I am trying to figure out is if I am in a position to claim the additional stamp duty back or not now that I have sold house 1 within 3 years of purchasing house 3.
In terms of House 1, was it legally separate?
Had you informed HMRC that House 2 was your primary residence?
Did House 1 have a BLT mortgage?
Contracts around House 1 being rented?
Your name wasnt on the council tax/electoral register (it was on house 2)?
Good luck claiming anything back if you do try. Still waiting on a 3 year old claim against HMRC for a grand.
All I am trying to figure out is if I am in a position to claim the additional stamp duty back or not now that I have sold house 1 within 3 years of purchasing house 3.
I suspect The answer is going to be no, because house one at that point was no longer your primary residence.
I think only time you're allowed to reclaim the excess stamp duty is when you buy a second house and then move into it [i.e. after renovations for example ] and then sell the first house which was your primary residence.
This allows people with one house to buy another, carry out renovations, move into it and then sell the first house.
You possibly can't do that because house 1 was effectively a second home.
That’s pretty much the conclusion I was coming to after looking into it @sharkbait
