SDLT - linked transactions

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    SDLT - linked transactions

    i am in the process of buying three buy to let apartments in a refurbed former council block. my solicitor has told me that even though each apartment costs less than £60,000 (2x58500 and 1x59500) i will have to pay stamp duty on the price of the three combined.

    this she says is because of some legislation which was adopted in Nov/Dec 2003 which states that if investors buy more than one apartment in the same development stamp duty becomes payable on the total. all this is in spite of the fact that the development is in an exempt area.

    my mortgage broker tells me nobody else is paying stamp - even those buying multiple units. my understanding was that stamp duty was a tax on properties rather than people.

    can you shed some light on this or point me in the right direction to get a definitive answer - i would rather not put £1,700 into gb's pocket (gordon brown, greedy beggar, you choose)

    #2
    I bought 2 identical flats in the same block a year ago, and to safeguard the position, my solicitor arranged for the completion dates to be different, ie 7 days apart,, to avoid the the transactions being considered as a "series" of purchases attracting stamp duty.

    Comment


      #3
      As far as I am ware, in an exempt area, stamp duty is waived anyway. Check with Inland Revenue, their advice is usually accurate.

      Comment


        #4
        SDLT treatment of linked purchases

        I want to buy six flats in one block & want to avoid paying too much stamp, the total value of them is 250-300k, any way of doing this ?

        Comment


          #5
          Buy them several years apart. Otherwise - no!

          Comment


            #6
            Originally posted by martynx
            I want to buy six flats in one block & want to avoid paying too much stamp, the total value of them is 250-300k, any way of doing this ?
            I am not an expert on this subject but ask your solicitor if it is possible to buy say 2 flats first, another 2 flats a bit later and finally a further 2 flats after that. I think the requirement is that none of the purchases should be part of the same transaction or dependent on eachother. Also consider buying some in your wife's name, if you have one and if you could trust her not to divorce you immediately thereafter.

            Ramnik
            Private advice is available for a fee by sending a private message.

            Comment


              #7
              Stamp Duty Land Tax- linked transactions cumulated

              A new one on me;

              According to PricewaterhouseCoopers some investors have recently discovered that instead of paying stamp duty on an individual property, the inland revenue has begun totalling up the value of properties bought and applying the highest rate of tax to the aggregate sum.

              For example an investor might buy five propertires at just under £120,000 minmum threshold and expect to pay no stamp duty. However it seems that the values are now being added up and a 4% charge is being levied on the whole sum, producing a tax bill of £24,000.

              Comment


                #8
                It's not new.

                Perhaps a couple reasons why it's talked about it is because more people are buying several off-plan flats and investors converse on forums such as this.

                It was discussed on this forum at the beginning of January: http://www.landlordzone.co.uk/forums...ead.php?t=1507

                Comment


                  #9
                  How to avoid SDLT

                  Can anyone confirm if the book mentioned in the title actually delivers on the promise?
                  http://www.amazon.co.uk/Avoid-Stamp-...e=UTF8&s=books

                  My interest lies in buying multiple properties from a single vendor; the question is will the Stamp office insist on aggregating the value of eight properties and demand stamp duty at 4% instead of 1% for each individual transaction?

                  Comment


                    #10
                    on further investigation the promise of avoidance seems doomed:

                    SDLTM30100 - Application
                    Linked transactions FA03/S108
                    Linked transaction are those which form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser or, in either case, persons connected with them. ICTA88/S839 defines when parties are connected.

                    If a vendor, for example, advertises a house with gardens for sale and the purchase is structured in such a way that the husband buys the house and his wife buys the gardens, these will be regarded as linked transactions.

                    The rate of tax will be determined by the sum of the chargeable considerations paid for both house and gardens.

                    It is a question of fact whether of not transactions are linked. A purchaser will need to make a full examination of all the circumstances leading to the transactions before completing their land transaction return.

                    Just because two transactions are between the same purchaser and seller does not necessarily mean they are linked. The transactions will be linked however if they are part of the same deal.

                    If two transactions are documented separately
                    The form in which the transactions are documented will not determine whether they are linked or not. For example, documenting transactions with separate contracts will not prevent them being linked if the transactions are under arrangements which indicate they are part of a single deal.

                    Series of transactions
                    Series of transactions means something more than that one transaction following the other. There must be something else to connect the transactions.

                    It would however be a question of fact whether purchases are totally unrelated. In particular the purchaser needs to consider whether the fact that the first transaction had happened had affected the terms of the second transaction.

                    Where successive transactions are linked, for example the grant of an option and its exercise, extra tax can be due for the first transaction.

                    Any extra tax is payable at the same time as tax is payable on the second transaction. See FA03/S81.

                    Linked transactions with the same effective date can be reported as a single notifiable transaction using a single land transaction return, this is at the discretion of the purchaser.

                    Where this is done, the transactions will be treated as a single transaction and all the purchasers, if more than one will be treated as joint purchasers. See SDLTM31600.

                    Comment


                      #11
                      Subsales

                      interested people might also like to check out:
                      http://www.hm-treasury.gov.uk/consul...amend19_24.cfm

                      Comment


                        #12
                        SDLT when buying several properties from one vendor.

                        I am sure this question must have cropped up previously, but I need urgent clarification. Pleas help. If purchsing several separate properties from one vendor, some properties are below sdlt threshold others are above it. My question is, is sdlt levied only on the properties above the threshold or on the sum of all property prices?

                        The properties are individual houses in different part of the town. Separate contracts were drawn up for each property.Completion of any one property is not contingent upon completion of any other, and completion date can be all on different dates.

                        Comment


                          #13
                          Yes. This problem is not new!
                          PROVIDED that all transactions are genuinely independent and disconnected (evidenced by separate Contracts and Transfers, preferrably on different dates), SDLT is assessed on each one separately.
                          See SDLT6 booklet p.33 re question 13 ("Linked transactions"). For confirmation, also try website www.hmrc.gov.uk/so/sdlt_index.htm
                          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                          4. *- Contact info: click on my name (blue-highlight link).

                          Comment


                            #14
                            And not a package deal where the seller agrees to sell to you for a lower price because you buying the lot at once!

                            As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients
                            RICHARD WEBSTER

                            As a conveyancing solicitor I believe the information given in the post to be useful (provided it relates to property in England & Wales) but I accept no liability except to fee-paying clients.

                            Comment


                              #15
                              SDLT on buying two flats from same vendor

                              I am selling two flats (they will be on seperate leases) that are part of the same house. If someone wants to buy them both and the freehold the price will be over £250k so they will pay 3% stamp duty.

                              If they buy each one individually then the buyer can pay 0% stamp duty on one, and on the other 1%.

                              I am thinking of suggesting this to him to make him offer more to me as his costs will be lower. If he says I am not interested as I only want them if I can have both and what's to stop you pulling out when I have bought just one, then what would my response to him be?

                              Can I have a contract saying I have to sell him both/he has to buy both. If I have a contract like this would it mean they aren't independent sales and so it is a tax dodge and the inland revenue might come after him later for stamp duty.

                              I think Jeffrey will know the answer to this one.
                              I'm trying to raise awareness of Myotonic Dystrophy, Pre-implantation Genetic Diagnosis (PGD) and In vitro fertilisation (IVF). Follow my PGD blog and please pass it on to any one you know who has an interest in PGD or IVF.

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