Could a tax tribunal ruling mean BTL investors avoid 3% stamp duty surcharge?
Buy-to-let investors could soon fill the HMRC with stamp duty surcharge refund requests. This is following on from a potential precedent set at a recent tax tribunal that saw a couple acquire a neglected building and were able to refute the additional 3% stamp duty charge on purchases of second homes. It was revealed at the tribunal, held in Bristol, that potentially, buy to let investors could avoid paying the 3% stamp duty surcharge.
This instance could cause many more landlords who have already paid the surcharge to demand a refund from HMRC and suggest that many property purchases could fall short of the additional 3% surcharge and just consist of the standard rate stamp duty. Paul and Nikki Bewley acquired their uninhabitable bungalow in Western-super-Mare and made the decision to bulldoze the original build in order to make way for a new property, thinking they would not accountable for the 3% charge for Taking on the additional property.
HMRC argued this view, believing that the 3% charge was applicable, as the property could be used as a dwelling in the future. However, a recent tax tribunal ruled against the HMRC and in favour of Paul and Nikki Bewley, stating that they can only charge the 3% if the home is in an acceptable living condition right away. HMRC has yet to decide on an appeal, stating: “We’re considering the judgment carefully.”
But, this ruling suggests that many buy-to-let landlords could be exempt from the 3% surcharge when buying a property that is uninhabitable at the time they purchased it. Commercial Trust Limited, a specialist buy-to-let broker, considers that this ruling could represent an opportunity for past claims from buy-to-let investors who have paid the additional 3% charge on properties that were uninhabitable at the time of purchase.
Under Offer: This term applies to a property where the landlord is considering an offer but remains on the market. It implies that further offers may still be considered until the landlord formally accepts or declines the current offer.
Let Agreed: This term indicates that a landlord has provisionally agreed to enter into a rental agreement with a prospective tenant, pending additional checks and referencing. It doesn't require the prospective tenant to have paid a holding deposit.
Let: This term signifies an established binding rental agreement between the landlord and tenant.
For both lettings and sales, the guidance addresses additional terms:
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New Instruction: It applies to a property assigned to an agent for marketing recently, even if it was previously listed with another agent without being sold or rented.
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New Method of Sale/Let: This term is used when a property is being marketed for sale or rent using an alternative approach to the original advertisement, such as transitioning to an auction or sealed bid.
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