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  • Stamp Duty Land Tax experts…..?
  • boxelder
    Full Member

    we’re looking to buy a plot of land which is currently part of a large garden. We would build a house on it, once we’d raised build funds by selling our current house. Does this attract the new higher rate SDLT?
    Gov guidance says Non-residential property includes:
    bare land (even where that land may subsequently be used for residential purposes);
    forests;
    any other land or property which is not used as a residence;

    However, this is within the curtilage of an existing residential property, so is it counted as residential?
    HMRC have gone home for the weekend.
    We’re not tax avoiding, we just need to know how much it will actually cost before committing to it.
    Ta

    Stoner
    Free Member

    http://www.mortgagesforbusiness.co.uk/news-insight/2015/february/stamp-duty-land-tax-on-development-land-purchases/

    you will [probably*] be making a residential property acquisition.

    So the current SDLT resi rates will apply
    Up to £125,000 Zero
    The next £125,000 (the portion from £125,001 to £250,000) 2%
    The next £675,000 (the portion from £250,001 to £925,000) 5%
    The next £575,000 (the portion from £925,001 to £1.5 million) 10%
    The remaining amount (the portion above £1.5 million) 12%

    *IANASDLTL, but I do this stuff a bit.

    jambalaya
    Free Member

    Its my understanding (not toally sure) you have 18 months to sell your current house so you can reclaim the second home stamp duty, you have to pay it upfront though

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    Stoner
    Free Member

    ah, I see what you mean. The second property SDLT rates.

    Then, yes, as Jamaba says, you will pay the higher rate.
    If you complete the sale of your first house within 18months you will be able to claim a refund.

    The problem, here for you is that you will make up one of a very small number of people who might get caught out and excluded from the policy buffers designed to keep the higher rates off those who just want one main residence. The 18month limit is arbitrary and is done to allow for sticky sales. Its not done to allow time for development. If you’re quick you could well get your development completed, move out, move in and sell within 18months. You might consider moving out and renting during the build.

    If you were buying bare land (non residential) you wouldnt have a problem. Unfortunately gardens are classified as resi property, and the classifications arent changing.

    there’s more to read here:
    https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

    boxelder
    Full Member

    Stoner – I’d used the link you gave, which is leading our solicitor to think we won’t pay the extra. No problem selling our house quickly – we need to to raise funds to build.

    Unfortunately gardens are classified as resi property, and the classifications arent changing.

    Have you got this officially documented anywhere please??

    Nipper99
    Free Member

    I’m generally guided by this at work (conveyancing solicitor). The HMRC SDLT Manual.

    http://www.hmrc.gov.uk/Manuals/sdltmanual/SDLTM00365.htm

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