Is this a replacement of an only or main residence?

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I have a query in relation to SDLT 2nd homes duty. I have a client who is looking to buy at £250,000. He is not selling his current residence yet but hopes to within the three year period. Clearly he needs to pay the additional 3% duty and then re-claim it assuming he does sell his current main residence within the time period. The issue is that he is intending to buy the new property at this stage with a Buy to Let Mortgage and then to rent out the new house until he has sold his current main residence, at which point he intends to move into the new house himself and convert the mortgage to a residential mortgage.

Please note that he does also own other buy to lets.

My query is that, if he proceeds as outlined above, will he still be able to reclaim the 3% duty when he has sold his current main residence and moves into the new house?



Its a question of the client’s intention at the time of purchase.  The legislation (paragraph 3(6) Schedule 4ZA FA 2003) says:

‘For the purposes of sub-paragraph (5) the purchased dwelling may become a replacement for the purchaser’s only or main residence if—

(a) on the effective date of the transaction (“the transaction concerned”) the purchaser intended the purchased dwelling to be the purchaser’s only or main residence,’

It seems clear that the ‘on the effective date’ qualifies the ‘intended’ not the ‘to be’.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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