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  • Tax

    Incorporation & stampduty surcharge exemption

    If your portfolio is in excess of 6 properties and you sell them to your limited company are you exempt from the stamp duty surcharge?

    As I understand it the surcharge doesn’t apply if you buy more than 6 properties in one transaction.

    If correct landlords with a smaller portfolio could join another Landlord with a similar size and incorporate together to avoid the stamp duty charge. E.g Landlord 1 has 2 properties and Landlord 2 has 4.

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    The SDLT charge will still apply.  The 6 property rule allows you to average the value of the properties if it results in a lower SDLT cost.  It doesn't exempt you from the charge to this tax.

    Regards

    Nigel

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    I was referring to the 3% surcharge.


    Is this still applicable

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    The 6 property rule allows you to use commercial rates so the 3% would not apply but you would not be able to average the price and you would pay commercial rates on the total value

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    There are ways to reduce SDLT and save on the SDLT surcharge, as we have identified in our articles:

    1 – This is a relief whereby you can take the total value of the property portfolio using the averaging method

    Article: https://www.optimiseaccountants.co.uk/red...e39rUyZNAY

    2 – Build a house instead of buy: when you buy a plot of land you pay SDLT on the value of the land only and no SDLT is payable on the completed home. In addition, vacant plots are often considered by HMRC as being liable for commercial rates of stamp duty rather than residential rates, and thus the 3% surcharge can be avoided

    Article: https://www.optimiseaccountants.co.uk/bea...e394EyZNAY

    3 – If you find a property investor that purchased properties in a limited company it may be better for you to buy the company rather than individual properties from the company. SDLT is charged on land and property. Buying shares in a company attracts a different level of tax with Stamp Duty (SD) at 0.5%

    Article: https://www.optimiseaccountants.co.uk/buy...e3940yZNAY

    4 – Commercial properties or buying flats above a shop. If you were to buy these types of properties you would pay the non-residential rates of SDLT and would not need to pay the 3% SDLT surcharge

    Article: https://www.optimiseaccountants.co.uk/bea...e4B9UyZNAY

    5 - Property developers will not pay SDLT on a purchase that has fallen through or on part exchange with a vendor:

    Article: https://www.optimiseaccountants.co.uk/pro...fsXQ0ycbBJ

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    Simon Misiewicz | Business Development Manager

    Optimise Accountants

    Telephone: 0115 939 4606

    website: http://www.optimiseaccountants.co.uk


    Thanks. The links don’t seem to work for me.

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    Property Tribes only allows links to sites that have an added level of security.  Cut and paste the links without the https and you will be able to access them. Smile

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    Hi Vanessa

    Thanks for the tip. I will remember that for next time.

    Warm regards

    Simon

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    Simon Misiewicz | Business Development Manager

    Optimise Accountants

    Telephone: 0115 939 4606

    website: http://www.optimiseaccountants.co.uk