Can Buy To Let Investors Avoid Stamp Duty?

The answer according to a recent tax tribunal is unequivocally yes...partially!

And this opens the door to refund requests being submitted to HMRC.

If you purchased a Buy To Let home as an investment and paid 2nd home/investment stamp duty and you meet the following criteria then you could claim your tax back.  The tax tribunal in Bristol ruled that the surcharge was only chargeable if the home was in suitable living condition immediately.

Stamp duty surcharges have been contested in the UK courts and the landlords won.

It only applies to the 3% extra that investors pay, not the full duty and how far back you can go is as yet unclear.  However, if you are a landlord that has purchased properties in the last 10 years this could literally buy you a house.

10 properties where you recover £2500 in stamp duty = 1 deposit for a new house and one more income stream, it's worth considering the claim.

The couple from Bristol purchased a derelict bungalow in Weston-Super-Mare, Weston is lovely beach near me but I prefer Weymouth, the beach at Weston stretches miles, the sea can be lost in the distance and contains river severn mud which is gooey around your feet.  Weymouth however is probably the safest beach I've ever been to, you can wade half a mile out and the water will still only be about chest high, perfect for kids...

I digress!

The bungalow was inhabitable and in the end was demolished with a new building put in its place.  The HMRC believed the stamp duty was applicable as they thought the property was capable of being used as a home at some point in the future despite being uninhabitable now.

The tax tribunal said that the surcharge only applied if the home was in living condition immediately.

That means to me that any property purchased from an auction probably passes this test.  A repossessed home is purchased in a condition where the boilers, electrics and water have been shut off and are not certified - unlivable condition.

When the chips land and the appeals are over would this be considered unlivable at the time of purchase?

Roof repair / structural issue - unlivable.

Damp / water ingress issues - can't be rented - unlivable.

Etc Etc.

There could be an avalanche of retrospective claims, and why not?

One good reason is because the HMRC haven't appealed.... yet.  

It's the HMRC, of course they're going to appeal, there'll be legal counsel in their offices thinking they can win this and advising the powers that be just that.

I suspect this one will go all the way to the supreme court, let the back and forth carry on & when all is said and done there will be forms just like with PPI whereby you can claim your money back.

Until then, I recommend watching from afar and letting the cards play out, leave the bickering to the argumentative ?.

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About the Author Martin Howard

Hi, I'm Martin Howard and I authored this article. I lead up the Key Properties group, we are a sourcing, development, estate and letting agents that operates mostly in South Wales. We typically over achieve on our projects and deliver great returns to our investors. Email me: martin@keypropertiesuk.co.uk if you want to chat or WhatsApp, call or message 07851 873995. Thank you for reading 😀😀

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