Understanding SDLT and its Impact on Married Couples: How to Avoid the 3% Surcharge

If you’re married and thinking of buying a property, there’s an important tax consideration you might not be aware of: for the purposes of Stamp Duty Land Tax (SDLT), you and your spouse are treated as one entity. This means that any property-related tax relief your spouse has taken advantage of could affect you as well.

SDLT and Your Spouse’s Property Ownership

If your spouse already owns a residential property and has used their SDLT relief, you won’t be able to claim it again. Additionally, if you buy a property while your spouse still owns one, you could be subject to the higher rates of SDLT. This is a 3% surcharge that applies when purchasing an additional residential property, which would mean you now own more than one home.

For example, if you and your spouse purchase a new home while one of you still owns an existing property, SDLT rules will treat you as if you both own two properties, triggering the 3% surcharge. This can significantly increase your overall purchase costs.

How to Avoid the 3% SDLT Surcharge

One way to avoid this additional 3% SDLT charge is by replacing your main residence. If you are purchasing a new property to replace your primary home, this surcharge doesn’t apply.

If you and your spouse are buying a new home to live in as your main residence, it may be wise to sell any residential property in your spouse’s name first. This would ensure that neither of you owns more than one property at the time of purchasing the new home, allowing you to sidestep the higher SDLT rates.

Can You Get a Refund on the SDLT Surcharge?

If you’ve already bought a second property while still owning your first, but later sold the original home, there’s good news. You may be eligible to claim a refund on the 3% surcharge. The key here is the timeline and criteria surrounding the sale of your previous main residence.

If you meet the criteria, including disposing of your previous property within a specific time frame, you may be able to reclaim the surcharge. This could provide significant savings, so it’s worth exploring whether you’re eligible.

Understanding how SDLT works for married couples can save you from unexpected costs. Planning ahead, particularly when it comes to property ownership, can help you avoid the 3% SDLT surcharge and even claim a refund if you’ve already paid it.

If you’re unsure about your SDLT situation, it may be worth consulting a property tax expert to ensure you’re making the most financially beneficial decisions when it comes to your next home purchase.

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