How To Avoid Stamp Duty On A Second Home

In most cases, you will need to pay stamp duty or its equivalent when purchasing a second property. However, there are stamp duty exemptions, but they are often very specific requirements.

Usually, you cannot avoid paying stamp duty when buying property, but there are several ways of getting around it. HMRC has several stamp duty exemptions they abide by, but you may need to do more work to achieve these.

• Purchase A Property Worth Less Than £40,000

If the property you are purchasing to be a second home is valued under £40,000, you do not need to pay stamp duty. This can limit the type of property you are purchasing and is likely more suited to buying land.

The average price of land in the UK is between £8000-£10,000 per square acre. This means you would need to develop properties on the land, driving up additional costs and making it long before you can use your second home.

New property tends to have a higher value, but unless you are willing to wait and have more funds set aside outside of the purchase price, then this is not a cheap way of avoiding SDLT.

• Purchase A Mobile Home

Mobile homes of any kind, such as a caravan or houseboat, do not require paying any stamp duty. If you are looking to use your second property as a holiday home, this can be a great way of avoiding stamp duty on a second home.

If you are looking to use your second home as an investment, such as turning it into a buy-to-let property, this is not the best way to avoid stamp duty. It will be harder to find tenants for a mobile home than it will for other forms of housing.

• Purchase A Second Property To Be Your Main Residence

If you are purchasing a second home to move in there permanently, you will still have to pay stamp duty when making the purchase. However, if you sell your first property and move into your second home full-time within three years, you can claim the money back as a stamp duty refund.

You will need to sell your first property within three years to claim this stamp duty refund. If you are buying a second home to use as a holiday home, as a buy-to-let investment, or for other use, you will still have to pay stamp duty.

If it takes longer than three years to sell your first property, you will need to write to HMRC explaining why it took longer than three years to sell.

• What is a property adjustment order?

In the event of a divorce, you can put a ‘property adjustment order’ in place, which transfers ownership of the property solely to your former spouse. A divorce lawyer can help with this. Once this is in place, you can purchase an additional property without paying stamp duty.

If a ‘property adjustment order’ is not in place, you can claim a refund on your stamp duty after buying a new home the same way you would when buying a new home to be your main residence.

If you are looking to use your second home as an investment, such as turning it into a buy-to-let property, this is not the best way to avoid stamp duty. It will be harder to find tenants for a mobile home than it will for other forms of housing.

If you’re fortunate enough to be considering purchasing a second home, you need to be aware of buy to let stamp duty land tax, or SDLT.

This is a tax you pay to the government if you purchase a piece of land, leasehold, or freehold property.

You only pay stamp duty tax if the property is worth over a certain value, which can change depending on where you are in the UK.

This tax gets increasingly higher the more the property is worth and this can become a significant amount of money, so finding ways to avoid stamp duty can help.

If you are investing in buy-to-let properties in the UK, learning how to avoid stamp duty on a second home can be a good way to lower costs when investing.

Property investment can be a costly endeavour, so saving costs where you can is important.

This post will give you information on how much stamp duty you will pay in different parts of the UK, and ways to avoid paying stamp duty on a second home.

Stamp Duty tax rates vary depending on where in the UK your property is, as Scotland and Wales have their own stamp duty land tax brackets.

First-time buyers can often receive discounts or incentives for stamp duty when buying their first property.

If buying a second property, you will normally have to pay additional stamp duty.

Here are some tables to explain how much stamp duty you would need to pay for a single property, as well as the higher rates of stamp duty you would pay for a second property.

If your second home becomes your main residence, you can claim back additional stamp duty by:

1. Ensure you have all the necessary paperwork

The necessary paperwork includes:

• Your own details
• Details of the property you’re claiming back for
• Information for your previous main address
• Tax details for the new property
• What you wish to claim back

2. Sign up for a Government Gateway ID

Government Gateway IDs are necessary for filling out the online form on the GOV.UK site.

3. Fill out the SDLT Repayment Form

You can fill out the SDLT repayment form through the GOV.UK site or print the completed form and send it through the post.

At RWinvest, we offer a range of lucrative buy-to-let investment properties, and a dedicated team that can provide information on the complexities of Stamp Duty.

If you’re ready to start investing in a second property, view our investment properties for Luton, Birmingham, Liverpool, London, and Manchester today, or get in touch directly.