Buying in London while keeping your US home

You came to London for three years. It is turning into five. The family is settled, you are considering buying a £1.5 million home, and the California house is still there in case you return.

Keeping that property could add £75,000 to the stamp duty on the London purchase. Under current rates, the bill could be £168,750 rather than £93,750, before any separate non-UK-resident surcharge.

Establish how much cash the purchase requires, including extra tax payable before any possible refund. A first British home is not necessarily your only property for these rules.

Your US home can count

For a purchase in London, HMRC considers qualifying residential property owned anywhere in the world. The tax is Stamp Duty Land Tax, or SDLT. Scotland and Wales have different property taxes; this article concerns England.

Broadly, higher rates can apply to a residential purchase of £40,000 or more if you own another qualifying residential interest worth at least £40,000 at the end of that day. Exceptions and further conditions apply.

A spouse’s or civil partner’s property can count even if you buy alone. Give your conveyancer details of what each of you owns, including joint interests and overseas homes, before relying on an estimate.

What the extra tax means for completion

The higher additional-property rates generally add five percentage points across the residential SDLT bands. At a £1.5 million purchase price, the difference is £75,000.

For illustration, assume individuals buying a single residential property with a 25% deposit, no reliefs and no separate non-UK-resident surcharge. The deposit is an example, not a lending recommendation.

Legal, mortgage, moving and other purchase costs are additional.

Even a refundable amount must be funded upfront. Check what remains outside the property after completion: money reserved for tax, school fees or a gap in earnings cannot also fund the purchase.

Selling first and selling later are different cases

Selling the California home first may remove the higher rates if neither buyer, nor a relevant spouse or civil partner, then has another qualifying residential interest. The main-residence replacement exception may therefore be unnecessary.

If other properties remain, the replacement conditions need closer attention. For an old home sold before the new purchase, these normally include disposal within the preceding three years and occupation as the buyer’s main residence at some point during that same three-year period. The new property must be intended as the main residence, and further conditions apply.

Your conveyancer needs the ownership and occupation history to establish whether an exception applies.

A later sale does not guarantee a refund

Buying first generally means paying the higher rates upfront. A qualifying sale of the previous main residence within three years can support a refund, but that is not the only test.

The ordinary replacement rules also require the buyer to have occupied the former home as their main residence at some point in the three years before the new purchase. If you left California five years ago and have not lived in that house as your main residence since, selling it within three years afterwards does not, by itself, qualify you for a refund.

Retaining an interest in the former home, or another reason for the higher rates, can also prevent repayment. Limited exceptional-circumstances provisions exist; treat any refund as conditional until the relevant facts have been checked.

For a current transaction, HMRC must receive a qualifying refund claim within 12 months of the old home’s sale or 12 months of the SDLT return’s filing date, whichever is later.

Your passport does not determine the residence surcharge

The separate 2% non-UK-resident SDLT surcharge uses specific residence tests. It is not a charge for being American, and it can apply alongside the additional-property rates.

On a £1.5 million purchase, it would add another £30,000 if applicable. Ask your conveyancer to establish the position for the transaction rather than inferring it from citizenship or ordinary income-tax residence alone.

Put the property costs into the household plan

The California home may be a base for returning, an investment or a connection to family life. Establish its ongoing cost alongside the London purchase.

Include mortgage payments, maintenance, insurance and property taxes, plus management and vacancy costs if rented. Ask UK and US tax advisers to assess rental income or potential sale proceeds after relevant taxes and costs. The headline property value is not the capital available to spend.

Before making an offer, ask your conveyancer for a written SDLT calculation, the assumptions behind any replacement relief or refund, and the amount you must fund upfront. Put that alongside the deposit and other purchase costs.

Keeping both homes may fit your plans. Establish the cash requirement before relying on an unconfirmed refund or US sale proceeds.

This article provides general information, not individual property or tax advice. Rates and rules were checked on 26 October 2026. Obtain conveyancing and appropriately qualified UK and US tax advice for your circumstances.

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