Stamp duty for multiple purchase from same seller?

by Readers Question

15:03 PM, 22nd October 2019
About 4 weeks ago

Stamp duty for multiple purchase from same seller?

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Stamp duty for multiple purchase from same seller?

Hi I’am currently in the process of purchasing 2 properties from the same seller.

I believe this is termed a “linked” purchase and extra SDLT is payable to HMRC.

Please can anyone advise me of what the position of SDLT might be in this situation.

Both of the properties being purchased are HMO’s.

Many thanks

Toni

Editor’s Note: From HMRC >> https://www.gov.uk/guidance/sdlt-linked-purchases-or-transfers

Stamp Duty Land Tax: linked purchases or transfers

When 2 or more property transactions involve the same buyer and seller, they count as ‘linked’ for SDLT. HM Revenue and Customs (HMRC) may count people connected to a buyer or seller as being the same buyer or seller.

If 2 or more transactions are treated as linked then the buyer pays any SDLT due on the total value of all linked transactions. This may mean that they pay a higher rate of SDLT than if the transactions are counted individually.

If all the properties that link are residential, apply the residential property rates to the linked transactions.

Higher rates of SDLT may be charged from 1 April 2016 on purchases of additional residential properties.

If any or all of the properties that link are non-residential, apply the non-residential property rates to the linked transactions.

SDLT transactions that count as linked

HMRC counts transactions as linked if:

  • there’s more than one transaction
  • the transactions are between the same buyer and seller or between people connected with either of them
  • the transactions are part of a single arrangement or scheme or part of a series of transactions

Connected persons

A connected person could be your relative, for example your brother, sister, parent, grandparent, husband, wife or civil partner – or one of their relatives.

If the buyer or seller is a business, a connected person would be a business partner and their relatives. It also includes companies and groups of companies who are connected to the business.

Different kinds of linked transactions

How and when you do a SDLT return depends on the type of linked transaction you have.

Transactions linked as part of a single arrangement

Some transactions are linked because they’re part of the same single arrangement or scheme. It’s the same whether you document them separately or not. If each transaction has a separate contract, and if the sales are part of the same deal, they count as linked for SDLT.

If you sell a residential property in such a way that one person buys the house but their relative buys the garden, the 2 transactions are linked. They’re connected people and they’re buying things from the same seller as part of a single deal.

Because the 2 transactions are linked, calculate the amount of tax due on the total chargeable consideration for all the transactions. Then, apportion this amount between the transactions in proportion to their share of the total chargeable consideration.

Transactions linked as part of a series of transactions

When a sale is followed by one or more related sales, if there’s something to link all the transactions together, they count as linked transactions for SDLT. There’s no limit to the length of time between the transactions.



Comments

Neil Patterson

15:06 PM, 22nd October 2019
About 4 weeks ago

Dear Toni,

Please see my Editor's Note above in the article which I hope helps as you have not given any specific detail of the transactions.

JB

10:57 AM, 23rd October 2019
About 4 weeks ago

I believe its different for Annexes. I've been told that if there are 2 properties on one site (house plus Annex) and one is valued at less than a third of the total value, you can benefit from Multiple Dwellings Relief. Ideally the Annex would be rated separately for council tax. The total value will be divided by 2 and then SDLT applied so you get the Nil band twice etc.

tony

19:54 PM, 23rd October 2019
About 4 weeks ago

Thanks Neil not sure what specific details would help, however i'am buying 2 HMO's with my 2 sons only because the mortgage co required me added because of my son's "lack of experience" , we are buying from a company , we have no connection to the Co , i did the calculation separately and it came out 9k less than when entering the total purchase price , can i separate the purchases, any advice, thanks


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