The UK government has extended the three year period in which you have to sell your previous home after buying a new residence in order to claim a refund for the stamp duty surcharge levied on second home owners. There is different rules in Wales where the stamp duty has been replaced by Land Transaction Tax.
Buyers must pay a 3% SDLT surcharge if they purchase a residential property whilst at completion, they own more than one residence. Buyers can claim a refund of this additional SDLT if they buy a new property and then sell their previous main residence at a later date. Under the normal circumstances, in order to claim a refund of the 3% SDLT, the previous main home has to to be sold within three years of purchasing the new residence.
However with the Covid-19 lockdown stopping the housing market in its tracks and most mortgage offers falling due to a reduced income, there have been good reasons for a delay beyond the original time limit.
HMRC(HM Revenue & Customs) has now changed its guidance this week on payment, adding examples of exceptional circumstances where you might be able to apply for a refund. On the HMRC site it says “you may still be able to apply for a refund if you purchased your new home on or after 1st january 2017 and were unable to sell your previous home within three years. To be able to get the refund, the delay in selling must be because of reasons outside of your control. These may be, but are not limited to, the impact of coronavirus preventing the sale”.
Once the exceptional circumstance has ended, the previous main dwelling must be sold before HMRC will consider whether the circumstances were exceptional. You can then write to HMRC and include an explanation of why you were unable to comply with the three year limit. It is a question of fact and degree and each case will be considered on its own merits. There is no pre-transaction clearance facility.
Whilst not the wholesale review of stamp duty that some had been calling for, this will assist some, should they find themselves unable to sell because of the pandemic.