work, or a property trader purchases a dwelling from the personal representatives of a deceased individual, then subject to certain preconditions, SDLT is not applicable. In both cases, these are investments outside of simple home ownership. 'Chained' purchases We can see preferential treatment in investment situations where property investors step in to purchase a home from an individual who is in a chain but cannot complete on a purchase, or if a property trader (or building company) buys a home from someone who is buying a new home from them in turn. In these cases, again subject to certain conditions, property investors will be exempt from paying SDLT. Uninhabitable Conditions Commercial stamp duty rates can apply where a property is in an uninhabitable condition (though this isn’t technically a relief or an exemption) this shows that where there is some investment, there is a different tax treatment. Transfer to connected companies Finally, and perhaps the most interesting example of the use of SDLT to encourage property investment and development behaviour is seen in certain circumstances where SDLT is not applied on the full value of a property when it is transferred to a connected company, but rather the purchase price instead for instance. Overall, we can see that the way stamp duty is applied can encourage investment, development and activity in the property sector. The content of this article is for information purposes only. For more specific advice please contact Ray Oshry
Most people will have come across stamp duty land tax (SDLT) at some point – it is the tax payable on the purchase of residential properties worth over £250,000 or non- residential properties worth over £150,000. If you have ever purchased a property, you will know that SDLT is calculated according to the price paid. In some circumstances, reliefs or exemptions are available, for instance where someone is a first-time buyer, or where a property is for charitable purposes. However, there are lesser-known areas where SDLT relief and exemptions is also available - such as where property investors or employers purchase residential properties for investment, development or trade purposes.
Multiple dwellings Where a company purchases multiple
dwellings as part of a single deal (or a series of linked transactions) multiple dwelling relief can help reduce the overall SDLT liability. It does not matter whether the units are all residential or not, or whether these are freehold or leasehold. This encourages creative development solutions. Purchase for reasons other than ownership How SDLT relief is used for informing different economic behaviours is also seen where a company purchases a residential property for letting purposes. In this case, relief can be claimed where a residential company property is purchased for more than £500,000 and where the investment is linked to things such as trade development, or where it will be occupied by an employee. As can be seen, where economic activity is linked to the purchase, and the purchase is not made for residential reasons alone, then SDLT relief may be claimed. If not claimed, SDLT is payable at a penal rate of 15%.
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Similarly, where an employer purchases a property for an employee who has to move for
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