Keeping first home as investment

Hi,

Hope someone can clarify some questions I have.
Basically I`ve bought another home which is due for completion in the next couple of weeks. I plan to keep my current home and rent it. I bought the current property in December 2003 and have been told by a"solicitor"that I will have to pay stamp duty on this as have not been in the property for more than 5 years. He`s not sure if i would have to pay the full amount due on the original purchase price (210K) or a percentage less than the time spent in the house..

Can anyone confirm my position on this?

Many thanks

Hey

As I understand it if you purchase as a first time buyer (for which you are stamp duty exempt) and subsequently rent the house out before you have lived in it for 5 years you will have to refund stamp duty to the exchequer to the value of the amount you would have paid if you were buying to let at the time of purchase. I dont believe that it matters how long you have lived in the house it will be the same amount! I am however definatly open to correction on this!

B

Bradfield is correct - if you rent out the property before December 2008 you will pay the full amount of Stamp Duty that would have applied to an investor buying the property in December 2002.

...and have been told by a"solicitor"that...

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Not sure what the meaning of "solicitor" is but a practicing solicitor should be aware of Stamp Duty rules and rates.

Do your sums, if the stamp duty is a lot more than the rental income you would receive it might be better to not rent the house for a year. Also bear in mind the stamp duty becomes payable immediately (otherwise penalties etc) you rent it out.

I estimate 4% of 210 = 8400 stamp duty. You need to check the rates at the time you purchased as the rules change all the time.

Lots of relevant info here (follow the links).

Thanks a million for the information!!

But one question, I would be exempt from paying the stamp duty once I have held the property as main residence for 5 years?? or alternatively leave unocuupied till Dec 08..

Thanks again

GWM80 said:

But one question, I would be exempt from paying the stamp duty once I have held the property as main residence for 5 years?? or alternatively leave unocuupied till Dec 08..

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Yes - the SD clawback only applies if you rent out a property that was originally purchased as an owner occupied PPR. If you rent it out after 5 years then it does not apply. If in doubt about the investment or taxation aspects of this prospective venture then get professional advice.