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Property Trader Stamp Duty Exemption – Total Exemption what a relief!

Written by

Katy Moss

Published on

November 23, 2023

Partner and Head of Commercial property, Katy Moss, discusses the criteria needed to qualify for the Property Trader Stamp Duty Exemption – specifically on the stamp duty exemption on purchasing probate properties from personal representatives of deceased individuals.

Multiple Dwellings Relief, also known as the Granny Annex Relief along with inter Company Group Relief, are some of the more well-known and documented Stamp Duty Reliefs. However, the Property Trader Stamp Duty Exemption is also potentially available as a complete exemption from Stamp Duty on specific property purchases subject to certain criteria being satisfied.

Qualification Criteria for Property Trader Stamp Duty Exemption – Probate properties

To qualify for the exemption, all of the following must be satisfied:

  • The purchaser must be a company (property trader) that in the course of its business, purchases dwellings from the personal representatives of deceased individuals (sole traders are not eligible); and
  • The deceased individual must have occupied the dwelling as their primary or only residence at some time in the two years ending with the date of their death; and
  • The area of land acquired does not exceed 10,000 square meters including the house itself

If the first two circumstances are satisfied above, partial relief may be available, however this is specific to the property. Our specialist commercial property team can advise if partial relief is available, contact the team to book an appointment.

Withdrawal of exemption

It is very important to bear in mind that even if you meet all the criteria above, the exemption will be withdrawn if the property trader does any one of the below:

  • Spends more than the permitted amount of £20,000 on refurbishment of the dwelling;
  • Grants a lease or licence of the dwelling – this means you cannot buy the property as a Buy to Let or investment property, it must be sold on or left vacant; or
  • Allows any of the company directors, shareholders, employees, or any person connected to occupy the dwelling

Refurbishment vs Modernisation for Safety

The permitted amount for the refurbishment of a dwelling is a minimum of £10,000 (or 5% of the consideration for the acquisition, whichever is the greater) and up to a maximum of £20,000.

This is where it gets interesting.

Quite often, probate properties require a significant outlay to bring the property up to a saleable condition and ready for market. The limit of £20,000 is unlikely to get you very far and of course if you exceed this amount the stamp duty exemption will be withdrawn, and you will be liable for the full amount of stamp duty payable.

However, the permitted expenditure is for refurbishment NOT modernisation for safety standards. Therefore, if some of the required works are for faulty electrics, dangerous central heating or storage heaters, unsafe bathrooms or fixing/replacing hazardous kitchen appliances or uneven and thus unsafe floors these are expenses centring around safety rather than development.

This is why it is crucial to outline the required works and their reasons including costings prior to completion to ensure that the permitted expenditure for refurbishment is not exceeded.
As with all Stamp Duty returns, HMRC can investigate further and potentially question the applied exemptions or reliefs, this is why it is fundamental to evidence the proposed works in a schedule of planned expenditure.

Do I qualify for total exemption?

Our commercial property solicitors are property specialists and can advise you on whether you qualify for a stamp duty exemption or relief. The team has a wealth of experience in matters such as this and will ensure that potential stamp duty reliefs and exemptions are reviewed in line with your transaction to ensure any available savings are claimed.

Contact us today to discuss your commercial property requirements.

About the Author

Katy Moss is head of the Commercial Property team at Amphlett Lissimore and specialises in buying and selling commercial property, business sales and purchases, business leases and licenses, and real estate finance.

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