HMRC SDLT: Stamp Duty Land Tax Relief for Property Traders Buying from Estates

Relief for Property Traders Acquiring from Personal Representatives

This relief applies to property traders purchasing a dwelling from the personal representatives of a deceased individual. The acquisition can be exempt from Stamp Duty Land Tax (SDLT) if specific conditions are met, including the nature of the business, the residence status of the deceased, and the size of the land acquired. Partial relief is available if the land exceeds the permitted area, with certain conditions affecting the chargeable consideration. The relief may be withdrawn under certain circumstances.

  • The purchase must be part of a business buying dwellings from personal representatives of deceased individuals.
  • The deceased must have used the dwelling as their main or only residence within two years before their death.
  • The land acquired should not exceed the permitted area; otherwise, partial relief can be claimed.
  • Partial relief involves a chargeable consideration based on the market value difference of the permitted area and the entire property.
  • Relief is withdrawn if the trader spends excessively on refurbishment, grants a lease, or allows occupation by connected persons.
  • Relief code 28 should be entered on the return to claim this relief.

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SDLTM21040 – Reliefs: Certain Acquisitions of Residential Property

Introduction

This guidance explains the relief from Stamp Duty Land Tax (SDLT) available when property traders acquire residential property from the personal representatives of deceased individuals. It outlines the conditions that must be met and what to do if those conditions aren’t fully satisfied.

Acquisition by Property Trader from Personal Representatives

When a property trader purchases a dwelling from the personal representatives of a deceased person, the transaction may be exempt from SDLT under certain conditions. Here’s a breakdown of what those conditions are:

Conditions for SDLT Relief

To qualify for this relief, the following three conditions must be satisfied:

1. Business Activity:
– The purchase must occur in the course of a business where the main activity involves buying properties from the personal representatives of those who have passed away.

2. Previous Residence:
– The deceased person must have lived in the property as their main or only home at some point in the two years leading up to their death.

3. Permitted Area:
– The area of land acquired must not exceed a specified limit, known as the permitted area.

Partial Relief Conditions

If the land acquired exceeds the permitted area but the first two conditions are still met, the property trader can still claim partial relief from SDLT. Here’s how it works:

– When claiming partial relief, part of the amount paid for the property becomes subject to SDLT.
– The chargeable amount is calculated as the difference between the market value of the permitted area (which includes the old dwelling and its grounds) and the total market value of the entire property being acquired, including any additional land.

Withdrawal of Relief

It is important to note that relief can be revoked if the property trader takes certain actions after acquiring the property. The relief will be withdrawn if:

– The trader spends more than an allowed amount on renovating or refurbishing the dwelling.
– The trader grants a lease or license for the property.
– Any employees or associates connected to the trader are allowed to live in or use the dwelling.

For definitions and further details on these criteria, refer to SDLTM21010.

How to Claim Relief

To apply for this relief, property traders should take the following steps:

– During the SDLT return process, they should enter relief code 28 in the relief question section on the return form.

Conclusion Note

This guidance provides a clear understanding of how property traders can benefit from SDLT relief when purchasing dwellings from the personal representatives of deceased individuals, as long as they meet the necessary requirements and are cautious about how they handle the acquired property afterwards. For more detailed information or if you’re unsure about specific situations, it is advisable to consult a tax professional.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Stamp Duty Land Tax Relief for Property Traders Buying from Estates

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