Can I avoid £213,750 stamp duty on my £2m holiday home?

My wife and I have just bought a £2m holiday home in Cornwall, but we face a stamp duty bill of more than £200,000. This is proving quite difficult to pay, as I lost my job last year. Is there any way to get around it? DC, CHIPPING NORTON

Because of your existing £3.6m house in Notting Hill, west London, and £1.5m home in the Cotswolds, you have fallen foul of the new three percentage point stamp duty surcharge, which applies when any additional property is bought beyond a main residence.

These rules were brought in by you and your chancellor, George Osborne, in an attempt to make buy-to-let investing less attractive. The surcharge has applied since April last year.

Before April 2016 your £2m holiday home purchase would have attracted stamp duty of £153,750. A large chunk of that would have been accounted for by the portion of the purchase price above £1.5m, which incurs a stamp duty rate of 12pc.

Now the bill is much higher because of the three percentage point surcharge, which applies to the entire value of the transaction. That adds £60,000 to the bill, taking the total to £213,750. Luckily, however, you and Mr Osborne had the foresight to leave a number of loopholes in the system – so there are some possible ways to cut the bill.

Our expert reporters answer readers’ questions. This week:

helps one prominent couple with the thorny issue of property taxes

Option one: make it your main residence The surcharge does not apply if a home is purchased to replace a main residence. As the transaction has already happened, you would need to sell your previous main residence within three years to claim a £60,000 refund.

Option two: get divorced

Theoretically, you could have got divorced before the transaction. If all of your existing properties had been transferred into one of your names, and the other person had bought the new Cornish house as the sole property in their name, the surcharge would not have applied.

However, in practice this is unlikely to have worked. Firstly, you would need to have shown that your marriage had broken down. As you are happily married and living together, this wouldn’t be possible without lying.

Option three: buy some woodland

Another option, which is yet to be tested by the British courts, is to buy a small plot of woodland along with the house, and have the purchase designated as “mixed-use”.

Technically, a small piece of woodland – which could be bought for as little as £1,000, say – can be bought in a different area entirely to the new house as long as it is bundled into the purchase.

The stamp duty rates on commercial and mixed-use property are much lower. Successfully exploiting this loophole would reduce the total stamp duty bill on your £2m home to £89,500 – a saving of £124,250, less the cost of the woodland and any additional costs incurred due to the more complex transaction.

Industry insiders say this method is beginning to be aggressively used, which may well lead to action by HM Revenue & Customs.

Former prime minister David Cameron and his wife Samantha have just bought a £2m Cornish holiday home. Could they cut their stamp duty bill?