The ‘replacement of an only or main residence’ rules could be a way out of it. By John Shallcross August 23, 2016 Zoopla UPDATED ON 29 DECEMBER, 2019 The comments section of Zoopla’s Q&A on 3% Stamp Duty Land Tax (SDLT) has many questions from individuals who are buying a house or flat to live in, but who have interests in other property.
Who is most likely to take care of repairs after moving in?
A seller who really doesn’t want to lose their buyer will be more likely to accommodate repair requests or a request for an associated price drop. Likewise, a buyer who doesn’t want to risk losing out on a property might just decide to take care of the fixes themselves after they’ve moved in.
When to use replacement of only or main residence surcharge?
As you have disposed of a share in the property, then you should be able to take advantage of the replacement of only or main residence exception so the 3% surcharge does not apply to your purchase. HMRC were concerned as to “abuse” of those rules however and made changes for purchases completing from 22 November 2017.
What makes you think twice about moving into a rental?
Factors like depreciation recapture, qualified vs. non-qualified use and adjusted cost basis could make you think twice before moving back into your rental to avoid taxes.
How long does primary residence have to be primary residence?
It must have been your primary residence for at least 24 months out of the previous 5 years. You can’t have claimed another capital gains exclusion in the past 2 years. There is an exception to the capital gains exclusion, and it relates to property that was previously purchased through a 1031 exchange.
Can a primary residence be converted to a rental property?
If you are planning on turning your primary residence into a rental property, there are tax considerations to take into account before making a final decision. Once you make the conversion, taxes on the property will be handled differently.
What happens when you sell a primary residence?
When selling your converted rental property, you lose the home sale exclusion. In 2015, the first $250,000 for single, or $500,000 of gain for married filing jointly is excluded from taxable income for the sale of a primary personal residence you’ve lived in for at least the last two of five years.
