Uninhabitable Property SDLT refund

Uninhabitable property SDLT refund, when purchasing a second residential property, either as a company or individual, you must pay an extra 3% stamp duty land tax (SDLT). However, in some cases, the purchases may not be subjected to this tax but if they already have, then you may be eligible for a refund.

What is stamp duty land tax (SDLT) for uninhabitable property purchases?

If you reside in England or Northern Ireland and want to make a second property purchase, then you will likely pay SDLT. Stamp Duty is actually a well-known tax most one must pay on additional residential property purchases or the sale of land. The amount you pay is determined by the value of the dwelling – e.g. different thresholds result in higher/lower surcharges.

As a general rule, the stamp duty rates are decided based on where your purchase falls according to HMRC’s ‘Stamp Duty Tax Bands’.

Now, let’s shift our attention to how stamp duty works for a second home, and after that, we’ll explain how SDLT refunds work for uninhabitable properties.

SDLT on a second home

No matter what kind of plans you have for your second property – to be used as a second residence or a buy-to-let, for example – it will always be classed by HMRC as a ‘second home’.

For ‘second properties’, there are certain SDLT exemptions, which typically apply to mobile dwellings such as caravans and motorhomes or freehold properties which have been bought for less than £40,000.

In some cases, property owners end up paying more SDLT than they should – in fact, people often end up paying significantly more SDLT for uninhabitable properties.

Are you wondering what makes a property ‘uninhabitable’? What about knowing whether it meets SDLT standards? Let’s break it down for you.

How SDLT works for an uninhabitable property

“Do I have to pay stamp duty if my second property is uninhabitable?” is a very common question solicitors are getting nowadays.

Well, the answer is mostly yes – that is, as long as it is within the non-residential SDLT band according to the criteria set out by HMRC.

Although you are only required to pay the non-residential SDLT rate if your second home is considered uninhabitable, many people are still overcharged. But why do people get overcharged to begin with?

One of the conditions in regards to a higher SDLT rate (3%) is that the building must be used, or will be used at some point, only as residential property after it is bought. Therefore, if the dwelling is deemed unfit to live for anyone and cannot meet its intended purpose, the higher rates will likely not be applied.

This typically happens when a property is classed as ‘uninhabitable’ – a key ruling for a property buying couple in 2019 exemplifies this when they won a court battle against HMRC for overcharging them.

How do I know for sure I’m entitled to stamp duty refund on an uninhabitable property?

Essentially, if you bought a second home which had significant issues or damages which rendered it ‘uninhabitable’, you can apply for an SDLT refund for uninhabitable property.

The only individuals who are typically not eligible for a refund are first-time property buyers. At Adam Accountancy, our expert accountants can help you claim overpaid SDLT on uninhabitable properties bought in the last four years. Contact us now for a consultation.

Be warned about scam companies claiming that they can get you SDLT Tax Refund

https://www.gov.uk/government/news/new-homeowners-warned-over-tax-refund-claims

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