Stamp Duty (SDLT) can be expensive, normally a developer would have have to pay the extra 3% SDLT.
Acquisition by property trader from personal representatives
Finance Act 2003 (legislation.gov.uk)
3 (1) Where a dwelling is acquired by a property trader from the personal representatives
of a deceased individual, the acquisition is exempt from charge if the following
conditions are met.
(2) The conditions are—
(a) that the acquisition is made in the course of a business that consists of
or includes acquiring dwellings from personal representatives of deceased
(b) that the deceased individual occupied the dwelling as his only or main
residence at some time in the period of two years ending with the date of
(c) that the property trader does not intend—
(i) to spend more than the permitted amount on refurbishment of the
(ii) to grant a lease or licence of the dwelling, or
(iii) to permit any of its principals or employees (or any person connected
with any of its principals or employees) to occupy the dwelling, and
(d) that the area of land acquired does not exceed the permitted area
Meaning of “property trader”
8 (1) A “property trader” means—
(a) a company,
(b) a limited liability partnership, or
(c) a partnership whose members are all either companies or limited liability
Meaning of “refurbishment” and “the permitted amount”
9 (1) “Refurbishment”of a dwelling means the carrying out of works that enhance or are
intended to enhance the value of the dwelling, but does not include—
(a) cleaning the dwelling, or
(b) works required solely for the purpose of ensuring that the dwelling meets
minimum safety standards.
(2) The “permitted amount”, in relation to the refurbishment of a dwelling, is—
(a) 10,000, or
(b) 5% of the consideration for the acquisition of the dwelling,
whichever is the greater, but subject to a maximum of £20,000.
This is also covered in SDLTM21040 – Stamp Duty Land Tax Manual – HMRC internal manual – GOV.UK (www.gov.uk)
This could be could be useful in the following circumstances
Property Flipping is done when you buy a property do a small amount of work to it and then sell it for a profit.
Using this SDLT relief could significantly increase your profit.
Buy Refurbish Refinance Rent (BRRR)
This relief can only be used by a trading company, residential letting doesn’t count as trading. However, you could have a group of companies, one is a development company and one a residential investment company.
The development company buys the Probate Property and gets the relief.
Once its been refurbished the development company could sell the property or transfer it to the investment company.
Groups benefit from Group SDLT relief. Do you pay SDLT on Properties Transfers within a Group? – Steve J Bicknell Tel 01202 025252