Stamp duty paid on whole building value?

by Readers Question

8:46 AM, 7th April 2015
About 4 years ago

Stamp duty paid on whole building value?

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Stamp duty paid on whole building value?

I would be very grateful if someone could give me simple advice on stamp duty. We bought a building with 5 studio flats in & paid the full stamp duty cost as if it was one large property, so paid 3% on £350,000 around £10,200.

I have worked out that if we had paid as 5 x individual flats we would have only paid 1%. Each flat has separate council tax so classed as individual flats by the tax office.

Can we get a refund after we have converted back to a single dwelling.

Love to here your comments & experience on this issue.

Richardstamp



Comments

Neil Patterson

8:53 AM, 7th April 2015
About 4 years ago

Hi Richard,

I haven't run across this scenario before so can't offer any advice, but I have found the "Stamp Duty Reserve Tax: getting a refund" .Gov page

See >> https://www.gov.uk/stamp-duty-reserve-tax-getting-a-refund

Sunil Lad

12:21 PM, 7th April 2015
About 4 years ago

Stamp duty I believe is based on how the property is registered with the Land Registry, presumably yours was registered as 1 unit and not 5 separate dwellings. However this wouldn't stop you splitting them and applying for a refund element against each. Ask your solicitors if it's worth the hassle and cost.

T J

13:54 PM, 7th April 2015
About 4 years ago

Hi Richard,

I had a similar scenario a few years ago when I bought 3 flats in the same block. Luckily I did some research and found out that if you ask your solicitor to do each one separately you only pay the stamp duty on each one individually. If you do them all together and the Inland Revenue call them a single purchase, then you pay the Stamp Duty on the total purchase price! If you have already bought them, then I'm afraid it is too late, I don't think you will get a refund.

The laws may have changed since 2006, so you will need to ask a solicitor, get two opinions to make sure you have the right facts.

eileen grace

16:43 PM, 7th April 2015
About 4 years ago

The positives seem to be ;
if each unit had been processed separately each conveyance would have been priced individually and probably much more than you paid,
it seems you were fortunate to get permission to convert into one. I know a local council refuse to return a house converted into three flats back to one.

I would now ask the solicitors why they did it the way they did

Colin Dartnell

18:10 PM, 7th April 2015
About 4 years ago

Trouble is you purchased as one building, I assume it was being sold that way. If they had been on the market as 5 separate flats then you could have bought them all as a linked purchase and only paid the minimum of 1%. Solicitors are not accountants so you can't really blame them if they do not know about this, although a lot probably might.

As far as turning the building back into one property I don't see how you can claim a refund as surely the building will still be worth what you paid for it or you will lose money.

Richard Halpin

22:11 PM, 7th April 2015
About 4 years ago

Hi Sunil Lad Thank you for your comment.
Yes it was registered as 5 flats , we approached the local planning dept before buying who said they would back us to reconvert back to a single dwelling, so once we bought the 5 properties we approached the planning we were told that they were unable to back us (nightmare) it then took us a couple of years to get planning, but at the same time we were being asked to pay 5 council taxes as they has recently changed the rules. It just seems as if it was win win win for the tax collectors & loose loose for us.

zoe

1:34 AM, 8th April 2015
About 4 years ago

I purchased 2 flats about 3 years ago which constituted the whole building. My solicitor first said that I would have to pay stamp duty as the original agreement was 220k for the whole building. We altered this to 95k for flat 1 and 125k for flat 2. This brought both flats in under the stamp duty threshold and meant I wouldn't have to pay any. The solicitor suggested that the flats needed to be priced differently for them to truly be 2 separate purchases and he had to deal with them as 2 separate purchases, meaning his fees were slightly higher, but nothing in comparison to the saving I made.

Ian Narbeth

10:00 AM, 8th April 2015
About 4 years ago

Richard
Multiple dwellings relief would probably have been available https://www.gov.uk/stamp-duty-land-tax-relief-for-land-or-property-transactions but if you are now converting back to a single dwelling, my understanding is that the relief will not be available.

If this were not the case then lots of expensive houses would be "converted" to multiple dwellings just before sale and then changed back by the buyer just to avoid SDLT. As the marginal rate of SDLT is 12% above £1.5 million it is likely that this would be abused.

Richard Halpin

15:27 PM, 8th April 2015
About 4 years ago

Thank you all for your comment & for keeping it simple I have found them helpful. I do understand that we all need to pay tax, but I find it can be confusing. Thank you all once again.


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