Do I pay the higher rate of stamp duty if I already own a home?

This is the single most common unpleasant surprise in a purchase, because it is not aimed at the people it catches. Inherited shares in a family home, a flat kept from before a marriage, a property abroad, a buy-to-let bought years ago, and simply completing on a new home a fortnight before the old one sells all trigger it. Establishing the position at offer stage, not at completion, is the whole answer.

Step by step

1. Apply the end-of-day test.The question is what you own at the end of the day the purchase completes. Owning two residential properties at that point brings the higher rate in, unless the replacement exception applies.
2. Remember it looks at all the buyers.If any one of the buyers owns another residential property, the higher rate can apply to the whole purchase. Married couples and civil partners are generally treated as one unit for the test even where only one is buying.
3. Count property anywhere in the world.A share in a family home abroad, an inherited interest, or a property held in trust can all count. Value thresholds apply to small interests — check the current rules rather than assuming a small share is ignored.
4. Understand the replacement main residence exception.If you are selling your only or main residence and buying a new one, the higher rate does not apply even though you own other property, provided the sale and purchase line up. Where they do not, the exception does the work through a refund instead.
5. Plan for the buy-before-you-sell case.You pay the higher rate at completion and claim it back once you sell your previous main residence, provided the sale happens within the statutory period after the purchase. Budget for the cash and diarise the sale deadline.
6. Note the refund deadline separately.There is a time limit for making the refund claim, running from the sale of the previous home or from the filing date of the original return, whichever gives the later date under the current rules. Missing it is not recoverable, so put it in the calendar.
7. Check the equivalents if the property is not in England or Northern Ireland.Wales has higher residential rates for additional properties, with a replacement main residence rule. Scotland has the Additional Dwelling Supplement, with its own thirty-six-month windows in both directions. The principles are similar and the details are not.
8. Raise it with the conveyancer at offer stage.Tell them about every residential property any buyer has an interest in, anywhere, including inherited shares and property held in trust. It is not a question they can answer without the facts and it changes the budget substantially.
9. Be careful about transferring property to avoid it.Transferring a share to a family member shortly before a purchase has its own tax and legal consequences and is not a straightforward fix. Take proper advice before doing anything of the kind.

Tips

• List every residential interest anyone buying has, anywhere in the world, and give it to the conveyancer at offer stage.
• If you complete before selling, put the sale deadline and the refund claim deadline in your calendar the same day.
• Get the calculation in writing before exchange. Correcting it afterwards is far harder.

Common mistakes

• Not mentioning a small inherited share — Interests you consider trivial can bring the surcharge in, and the conveyancer cannot advise on facts they have not been given.
• Assuming the refund is automatic — It has to be claimed, within a deadline, after the previous home is actually sold. Nobody prompts you.

If it doesn't work

Questions people ask