Stamp duty refund via Limited Company?

by Readers Question

9:06 AM, 7th March 2018
About 3 years ago

Stamp duty refund via Limited Company?

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Stamp duty refund via Limited Company?

My hubby and I were unable to sell our residential property (1) before buying our new residential home (2) so we therefore paid an extra £11k in stamp duty because of the second home rule.

In the meantime we’ve rented out property (1).

We always planned to sell (1) before the three year mark, and claim back the extra stamp duty we paid.

This morning I had a thought that I don’t know the answer to: If we set up a limited company that purchases property (1) from us – and pays stamp duty on it – could we then claim back the extra stamp duty paid on property (2).

Thank you

Sunny


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Comments

Neil Patterson

9:18 AM, 7th March 2018
About 3 years ago

Hi Sunny,

If you ignore the fact that the purchaser is a limited company then clearly under the refund rules you would get a refund of the additional 3% surcharge if the previous main residence was sold within 3 years.

Now a limited company is a separate legal entity and will be seen as a new purchaser of the previous main residence and will transfer the money to the vendors for the sale and pay SDLT in the normal way. So it is just as if you sold to anyone else.

Therefore at the end of the day you are effectively transferring the additional SDLT to the limited company.

S Somerset

11:31 AM, 7th March 2018
About 3 years ago

Reply to the comment left by Neil Patterson at 07/03/2018 - 09:18
Thank you Neil, that's helpful. Property (1) is worth a lot less than property (2), so it might be worth us doing if we decide to keep property (1).
thanks again!
S

steve p

18:56 PM, 7th March 2018
About 3 years ago

Yep seems a valid action, there are a few points though... The company will need to pay the addition rate 3% SDLT, also if you have any sort of mortgage it will possibly need to change to a commercial mortgage, this would mean fees for the getting out of the old mortgage as well as fees for the new mortgage and a likely higher rate of interest.

The advantage is there are ways to pay yourself from a limited company that are tax efficient if you are both 40% tax payers. You would though avoid the section 24 tax. Basically what im trying to say is there is more to think about than just the SDLT.

wanda wang

19:14 PM, 9th December 2018
About 2 years ago

Reply to the comment left by S Somerset at 07/03/2018 - 11:31
Hello I am just wondering have you sold your property (1) to yourself (limited company) and claim back addition rate 3% SDLT ?

Thanks
Wanda

wu

11:24 AM, 8th August 2019
About A year ago

Hi Sunny, wondering if you have successfully claimed the refund? Because i am looking forward to set up a same structure. Thank you! Michelle

LandLordCurtis

19:45 PM, 20th July 2020
About 4 months ago

Reply to the comment left by S Somerset at 07/03/2018 - 11:31
Hey Sunny. Did you ever go ahead and do this? I am considering the same approach 1.) to limit the impact of Section 24 and 2) to reclaim the Second home duty.

I'm in a similar situation to yourself whereby the property I bought as a "second home" which is my main residence and it was significantly more expensive than my actual BTL property and so attracted a far higher SDLT.

Keen to reclaim this back if able to do so once the original property (the BTL) is transferred into a Limited Company.

Any help is appreciated.

Thanks
Mark


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