Stamp duty when combining two properties

SDLT_Geek

I agree that interpreting the provisions of Finance Act 2003 Schedule 4ZA, the 3% surcharge is due in this case.


HMRC take this view too, see their November 2016 guidance on additional properties, chapter 9 example 12.

PField

Is your property mortgage free? If so there may be options available to avoid additional stamp duty, if it's payable, by temporarily transferring your main residence to someone else for no consideration.

Slithery

But SDLT would then be due when the property is transferred back to the OP.

PField

Yes but SDLT is based on the consideration not the value of the property, so if that consideration was very small, say £100, then stamp duty is not very much.

Slithery

If they're linked transactions (which they obviously are) then SDLT is based on market value, not consideration.

HMRC aren't stupid.

PField

That's not what linked transaction means and even if they were, then the SDLT is based on the consideration and not on marke value.

Cappiuk

There are a lot of people guessing here! The SDLT laws are complex and very broadly drafted (in order to be able to defeat all these avoidance schemes).

When you purchase the second property, SDLT as a second residence will be due. There is no way to buy the second and instantly combine it with the first.

When you combine the two properties, try to ask for a refund. I suspect you will get little sympathy from HMRC.

SmashedAvacado

this is complex

You shoudl get proper advice on this as there may be a way of structuring the transaction to avoid (not evade) the additional charge, should one be payable. Presumably you will own the freehold at completion? if not, have you dealt with landlord's consent about consolidating the properties?
if you do own the freehold you may be able to surrender the leases in a way that ensures your legal ownership continues in one property only - but that will need some thinking through. This isnt a question for the amateurs. but worth exploring given the potential saving.

davidmcn

Not sure why this thread has been resurrected - I think we reached the correct answer over a year ago.