Property Taxes – Stamp Duty & VAT - PowerPoint Presentation

Property Taxes  – Stamp Duty & VAT
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Slide1

Property Taxes – Stamp Duty & VATSlide2

Stamp Duty Land Tax (“SDLT”)Slide3

Overview

Applies

to the purchase of additional residential property

Payable

in addition to the usual SDLT Certain exemptions apply including:The purchase of a replacement main home;A property which is partly residential and partly non-residential;A residential property worth less than £40,000; andA caravan, mobile home or houseboat.

Page

3

The 3

% SDLT SurchargeSlide4

The 3% Surcharge - Pitfalls For The Unwary

Potential Pitfalls

The Couples Trap

Joint

purchasers, married couples and couples in a civil partnership may inadvertently be subject to the 3% surcharge when they buy a new home. Joint purchasers (including spouses) are treated as one buyer under the surcharge rules, so if one of the couple already own a property, this could trigger the 3% surcharge. The Failed Sales Trap If a new home is bought before the old home has been sold, for example because the sale of the old home falls through but the purchase of the new home still goes ahead, the purchase of the new home will attract the 3% surcharge.

Although HMRC will repay the 3% surcharge provided the old home is sold within three years, funding for the additional cost on the purchase of the new home

is frequently an issue.

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4Slide5

The 3% Surcharge - Pitfalls For The Unwary

Potential Pitfalls

The

Parent

TrapIf a parent assists their child to buy their first home, for example, and the mortgage company insists on them being named on the title deed, the parent’s existing ownership of their own home will result in the purchase of their child's home being subject to the 3% surcharge in its entirety, despite this being the child’s first residential property purchase.

The Relocation Trap

If a home owner moves to a new area to take up employment and rents out his or her old home, the purchase of a new home in the area they have moved to will attract the 3% surcharge.This is the case even if the home they have retained is in a different country and,

for

example, the old home has been retained because they intend to move back there.

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5Slide6

The 3% Surcharge - Pitfalls For The Unwary

Potential Pitfalls

The Rental Property Trap

If a first time buyer already owns an interest in an investment property (such as buy-to-let) either in the UK or abroad and that investment is worth more than £40,000, the first time buyer will be liable to the 3% surcharge on the purchase of their first home.

The Holiday Home TrapMany holiday homes are subject to planning restrictions which do not permit their occupation for certain months of the year.

Although such homes cannot be regarded as permanent homes because of these restrictions, they are still treated as second homes for SDLT purposes, and so the purchaser is liable to the 3% surcharge if, as is very likely, they already own another home elsewhere.

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6Slide7

Client Stamp Duty Refunds - Case Studies

Granny Annexe

A client purchased a substantial property in Surrey which included a granny annexe.

Having reviewed the layout of the

property in detail we were able to claim a stamp duty refund for of £50,000.If any of your clients have purchased a residential property in the last year with a granny annexe or a staff flat, then please get in touch as they may be entitled to a stamp duty refund.

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7Slide8

Client Stamp Duty Refunds - Case Studies

Land

A client purchased a substantial country home in Sussex which had land of

20

acres which included agricultural land rented by a local farmer.On reviewing the specific facts of the case, and carrying out a site visit, we were able to obtain a stamp duty refund of £60,000.If any of your clients have purchased a rural residential property in the last four years with substantial land, then please get in touch

as they may be entitled to a stamp duty refund.

Page

8Slide9

Client Stamp Duty Refunds - Case Studies

3% Surcharge

A client purchased a property in London as his main home in May 2016 and paid the 3% stamp duty surcharge as he already had a home abroad.

He subsequently sold his overseas home in December 2016, but was not aware that he could reclaim the 3% surcharge.

We were able to reclaim a stamp duty refund of over £80,000. If any of your clients have purchased a residential property and paid the 3% stamp duty surcharge, then please get in touch as they may be entitled to a stamp duty refund.

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9Slide10

VATSlide11

VAT on Property Alterations

In certain

circumstances,

a reduced rate of VAT can apply to the cost of residential property alterations.

For example:The creation of a new dwelling can be Zero rated.If the number of dwellings is changed in an existing building, or a dwelling that has not been lived in for more than two years is renovated, the building costs can be charged at the reduced 5% VAT rate. It is very important that a VAT specialist is involved in the

property alteration planning process, prior to the appointment of builders, so that the correct VAT treatment is applied.

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11Slide12

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12

Any Questions?Slide13

Contact Details

Andrew Shilling

Partner

andrew.shilling@rawlinson-hunter.com

Karen DoeDirectorkaren.doe@rawlinson-hunter.comLondon Office

Rawlinson & Hunter

Eighth Floor6 New Street Square

London EC4A 3AQ

T +44 (0) 20 7842 2000

www.rawlinson-hunter.com

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13

By: celsa-spraggs
Views: 41
Type: Public

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Property Taxes – Stamp Duty & VAT - Description


Stamp Duty Land Tax SDLT Overview Applies to the purchase of additional residential property Payable in addition to the usual SDLT Certain exemptions apply including The purchase of a replacement main home ID: 656953 Download Presentation

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