HMRC SDLT: Stamp Duty Land Tax Relief for House-Builders Acquiring Property from Individuals

Stamp Duty Land Tax Relief for House-Building Companies

This relief applies when a house-building company acquires a residential property from an individual who is purchasing a new dwelling from the same company. The transaction can be exempt from Stamp Duty Land Tax if specific conditions are met, allowing for either full or partial relief.

• The individual must have lived in the old dwelling as their main residence within two years before the acquisition.
• The individual must purchase a new dwelling from the house-building company and intend to use it as their main residence.
• Each acquisition must be made in consideration of the other.
• The land acquired by the company should not exceed the permitted area to qualify for full relief.
• If the land exceeds the permitted area, partial relief can be claimed, with some consideration becoming chargeable.
• Relief code 08 should be entered on the return to claim this relief.

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Guidance on Reliefs for Certain Acquisitions of Residential Property

Overview

This guidance covers the exemptions available for Stamp Duty Land Tax when a house-building company (or a company related to such a company) buys a residential property from an individual. It focuses on the conditions required for the transaction to qualify for relief from Stamp Duty Land Tax.

Conditions for Exemption

For the purchase of a dwelling by a house-building company from an individual to be exempt from Stamp Duty Land Tax, the following conditions must be met:

– Main Residence Requirement: The individual must have lived in the old dwelling as their main or only home at some point in the two years leading up to the acquisition date.
– New Dwelling Acquisition: The individual must be acquiring a new dwelling from the house-building company.
– Intent to Occupy New Home: The individual must intend to occupy the new dwelling as their only or main residence.
– Reciprocal Acquisitions: Each transaction (selling the old dwelling and buying the new one) must occur in relation to each other.
– Permitted Area for Land: The area of land acquired by the house-building company must not exceed a specified limit.

Permitted Area for Land

The ‘permitted area’ refers to the size of land that can be included in the exemption.

– If the land acquired by the house-building company exceeds this limit but other conditions are still fulfilled, it is possible to claim partial relief.
– If you are claiming partial relief, a section of the overall transaction value will still incur Stamp Duty Land Tax.

Understanding Chargeable Consideration

When claiming partial relief due to excessive land area, you must determine the chargeable consideration. This is calculated as follows:

– Take the market value of the permitted area, which includes only the old dwelling and its approved grounds.
– Subtract this from the total market value of the old dwelling, including all the land.
– The difference will be considered chargeable and liable to Stamp Duty Land Tax.

For more definitions and specifics regarding these criteria, you can refer to SDLTM21010.

How to Claim Relief

To obtain relief under the relevant regulation (FA03/SCH6A/PARA1), you need to complete the following on your Stamp Duty Land Tax return:

– Locate the question regarding relief.
– Enter relief code 08 where indicated.

By fulfilling these steps and ensuring that all conditions are met, individuals can successfully claim relief from Stamp Duty Land Tax when selling a previous home to a house-building company while purchasing a new dwelling.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Stamp Duty Land Tax Relief for House-Builders Acquiring Property from Individuals

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