UK Edition
'I'm in the RAF and have to live on base. So why must I pay the stamp duty surcharge?'
My wife and I are in the RAF and have therefore moved around every few years for work. We bought a house 26 years ago, thinking we were doing the right thing by getting on the property ladder. Because we moved about so much, and needed to live in military housing, we have never lived in it and rented it out.
Now we want to buy for ourselves, we will be hit by the stamp duty surcharge. We’ve read you don’t have to pay if you are replacing your main residence, but we live in military housing. What can we do?
CH, via email
You are right that your current circumstances mean you will pay the stamp duty surcharge. Any buyers who already have a “major interest” in a property must pay an additional 3pc in stamp duty on the transaction.
This was announced by former chancellor George Osborne in 2015, and came into force last year, and was meant to target buy-to-let landlords. But there are numerous circumstances whereby people are unintentionally caught out.
The rules state that you can claim a refund of the additional stamp duty paid on a purchase if you are replacing your main residence. In practice, this means if you sell the original property within three years of purchasing the new one you will be eligible for a refund.
Many people have taken advantage of this - HMRC handed back £127m to more than 10,000 homeowners last year.
The problem in your case is that, as you have never lived in the house you own and are currently in military accommodation, you have no main residence to sell. This means you would not be able to claim your refund.
Nimesh Shah, a partner at Blick Rothenberg, the tax advisers, said there are two ways you could avoid being liable for the additional tax.
The first, and most obvious, is simply to sell the house you currently rent out. This would mean you would not have a major interest in any other properties and, while it may not be your ideal situation, you would not be liable for the tax.
The other option you have is to move into the rental property and live there, thus making it temporarily your main residence. This would mean, as long as you sell it within three years, you would be eligible for a refund of the extra stamp duty paid through the replacement rule.
Mr Shah said the criteria for what qualifies as a main residence is not clear cut, and there is no specific length of time for which you would have to live there.
An individual does not necessarily have to spend most of their time at their main residence, but questions HMRC will consider include; where does your family spend most of its time? Where are you registered to vote? Which address do you get your post delivered to?
Of course, both of these options involve selling your original rental property. If you want to keep hold of it, you have no option but to grit your teeth and bear it when it comes to the additional stamp duty.
Do you have a question about stamp duty? Email sam.meadows@telegraph.co.uk