SDLT question

[Rangeroverover]

A large house was split in two many years ago person owns one half already and he now wishes to buy the other half and put it back together as one large house, will he have to pay the extra 3% sdlt on the half that he's now buying as he will be creating a single dwelling from it?
Would it help if it went back onto one title for both properties?
Thanks in advance

[Rovinghawk]

I think this one falls between the cracks & any answer is subject to the interpretation of the taxman rather than any hard & fast rules.

[Rangeroverover]

As the price of the other half of the house is £1.8m not paying the extra 3% makes a huge difference how do I ask Hmrc?

[Flooble]

https://www.gov.uk/government/organisations/hm-rev...

Seems to me that the extra SDLT is payable.

https://www.gov.uk/stamp-duty-land-tax/overview

You pay the tax when you:

buy a freehold property
buy a new or existing leasehold
buy a property through a shared ownership scheme
are transferred land or property in exchange for payment, eg you take on a mortgage or buy a share in a house


But if they do the conversion quickly they can get a refund https://www.gov.uk/stamp-duty-land-tax/residential...

If you’re replacing your main residence

You won’t pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

"If there’s a delay selling your main residence and it hasn’t been sold on the day you complete your new purchase:

you’ll have to pay higher rates because you own 2 properties
you may be able to get a refund if you sell your previous main home within 36 months"

Edited by Flooble on Wednesday 21st September 22:27

[Rangeroverover]

My suspicion is this scenario wasn't thought of at the drafting stage so I would think one would approach Hmrc at a senior enough level that before purchase they will give a yes or no.

So could the answer be within 36 months if put onto a single title refund is due

Or could Hmrc take the view that there has not been a disposal so no refund

I've looked at the granny annexe get out but that won't work as the two properties are worth about the same

[KevinCamaroSS]

I cannot see why the duty would not be due, or how it would be reclaimable.

[Rangeroverover]

I'm hoping because at the end of the process you have a single dwelling, by reuniting the two halves of a house that was split in two previously, the owner will not end up with two properties, he will only have one house ;so is it reasonable that he has paid extra tax for a second property. now having put the two halves back together he does own two houses so Shirley a refund is due if done within 36 months

[Flooble]

That's the line I would take, going for a refund approach. It seems to fall perfectly within the definition of owning two houses for a brief period and then reverting to a single property. The only wrinkle being that you haven't, strictly speaking, "sold" your original residence - unless you can do something with the title merging to make it a transaction.

The only danger is that they try and get three bites of the cherry:

1x SDLT on purchase of the second property
1x 3% levy as a second property
1x SDLT when transferring titles around to merge the two properties into one

I'd hope that they are more reasonable than that though.

[KevinCamaroSS]

Rangeroverover said:

I'm hoping because at the end of the process you have a single dwelling, by reuniting the two halves of a house that was split in two previously, the owner will not end up with two properties, he will only have one house ;so is it reasonable that he has paid extra tax for a second property. now having put the two halves back together he does own two houses so Shirley a refund is due if done within 36 months

Indeed, however you have increased the value of the 'single' home by 100% by combining them. If bought as one originally them the duty would have been paid on the higher value. Not sure I follow your argument here.

[Flooble]

KevinCamaroSS said:

Indeed, however you have increased the value of the 'single' home by 100% by combining them. If bought as one originally them the duty would have been paid on the higher value. Not sure I follow your argument here.

I believe he is talking about the 3% surcharge on second homes.

[Jobbo]

I don't think there's a hope of avoiding the 3% surcharge. That's on the basis that both parts of the property are separately occupiable in their own right (e.g. self-contained flats). If so, you're absolutely, 100%, buying an additional property. You might intend to unite the two in future but at the end of the completion day, you'll own two flats, not one whole property.

[Rangeroverover]

No structure was originally a large grand house, it was divided vertically into two semis, probably in the 70s, one half is occupied by Mr Smith as his main home, the other half is for sale and may be bought by Mr Smith for about £1.8m, his intention is to turn it back into a single dwelling, one address, one set of council tax, one set of utility bills, one front door etc.

So he will end up owning a single property, granny annexe rule won't fly as they are worth about the same each; as there will not be a transaction/disposal within 36 months can he reclaim the 3% extra SDLT he paid on purchase

[MrHargreaves]

no

hopey helpy

[KevinCamaroSS]

Flooble said:

I believe he is talking about the 3% surcharge on second homes.

I see what you mean. I still do not think he has any chance of claiming it back though.