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  • Tax

    Success! SDLT refund on "uninhabitable" house



    A big thank you to Vanessa and the Tribes for bringing this to our attention,

    ‘A tax tribunal heard in Bristol this month found in favour of Paul and Nikki Bewley, who bought a derelict bungalow in Weston-super-Mare for £200,000 as a buy-to-let investment in January 2017’.

    We bought an unfinished property in 2016, which had no downstairs floors , ceiling, walls and no kitchen or heating.

    It had been started in the 1970's but never finished. At the time we successfully applied to have it zero Council Tax rated, with the Ratings Office, as uninhabitable.

    As a result of Vanessa's post, above, we applied to HMRC for a full refund, quoting the stated case and received the cheque today, with no argument.

    So once again a big thanks to Vanessa

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    This is wonderful news Derek - so pleased for you. Smile

    It was in reference to this post:

    Legitimate way to avoid 3% SDLT surcharge

    As knowledge shared by PT has secured you a refund, could you be so kind as to review Property Tribes on Trust Pilot?  All that we politely ask is that you do not mention myself or Nick, as it is about the whole community sharing knowledge, not just us. 

    What will you be spending your windfall on?! Smile

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    Trust Pilot done.

    The SDLT refund goes towards offsetting the original capital setup costs, so no spending spree I'm afraid

    Thanks

    Derek

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    great news for you and the property market. 

    So this will according to me mean that HMRC has acknowledged that when a property is inhabitable no stamp duties apply?

    Now what is an inhabitable property??

    Does it means no kitchen or will a really really really old and disgusting kitchen mean the same???

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    This is because it does not meet the criteria of "residential property"

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    Not, NO stamp duty, just not the additional 3%.

    I think they will judge everyone on a case by case basis. One important advantage we had was that it was declared uninhabitable by The Ratings Office. I also think you need to read the Ruling in the Tax Tribunal case.

    From what I understand, if it is simply a case of doing some repairs or cleaning to make it habitable then you still have to pay.

    I do think we were lucky as ours had never been finished and therefore had essentials missing.

    We've just bought one where the ceiling was missing in the kitchen because of escaping water and I wouldn't think we'd get exempt because of that, as all it needed was a plumber for an hour and a new plasterboard ceiling, even though it was not habitable or mortgageable as it was.

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    It could be interesting to see what HMRC world say to your recent project where the ceiling is missing. I know some work is “easy” when you know what you are doing, but that doesn’t make it habitable. 

    Are you going to try?
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    We won't be trying it for our current purchase. I've been reading through the VERY LONG Judgement in this case and don't think it would apply. I couldn't cut and paste the relevant section so have put the link below

    Para 101 is where they define 'Suitability to use as a dwelling'

    https://www.casemine.com/judgement/uk/5c...79deca6b0e

    The interesting thing is it's all about the suitability definition at the Moment of purchase. They state it's irrelevant what it was used for before or intended to be used for.  So I would conclude that something like a badly fire damaged house would be exempt from the extra 3%.

    They state things like 'just removing a kitchen or bathroom from a house wouldn't make it unsuitable as a dwelling'.

    So as I said before they will judge every case on it's merit

    Interesting reading

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    Bizarre how SDLT is still payable on a property that is not inhabitable....
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