#sdlt

The piecemeal character of the law, which might result in unanticipated SDLT costs, is the root cause of a good deal of the possible issues that could arise.

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Stamp duty land tax (SDLT) on the residential property also applies to land that forms the garden or grounds of the property. To ensure that the right rate of SDLT is applied, it is therefore important to ascertain whether any land purchased with a property constitutes its garden or grounds. The rules here are not the same as those applying for capital gains tax private residence relief.

HMRC have recently updated their guidance in this area.

Status of the building

The first step in determining whether the land is residential land is to determine the status of the associated building. If the building is a residential property for SDLT purposes, all land forming part of the ‘garden or grounds’ is residential property. Consequently, if at the time of purchase the property is not capable of being used as a dwelling, or is in the process of being constructed or adapted for residential use, the building is not a residential property for SDLT purposes and any associated land is also not residential property.

Status of the land

Land that constitutes the ‘garden or grounds’ of a building which counts as residential property for SDLT purposes will also be residential property, and therefore subject to SDLT residential property rates, even if it is sold separately from the building.

The key date is the date of the transaction. However, past use of the land is taken into account by HMRC is order to establish the relationship between the land and the building. Future or planned future use is not relevant, although where use changes over time, the status of the land may also change.

No single factor

In deciding whether land counts as ‘garden or grounds’ a range of factors will come into play – there is no single determining factor. However, not all factors will carry equal weight. It is necessary to consider how land is used.

Questions to ask include:

Is there evidence that the land has been actively and substantially exploited on a commercial basis?

If the activity could be for leisure or commercial purposes, such as beekeeping or equestrian use, is there evidence of commercial use?

Has a lease been granted to a third party for the exclusive use of the land? This would suggest that the land is unlikely to be ‘garden or grounds’.

Is the land of a type which would be expected to be ‘garden or grounds’ unless commercial use is established, such as land used as a paddock or orchard?

Is the land agricultural land which is sitting fallow? Such land is unlikely to be regarded as ‘garden or grounds’.

Outbuildings

The nature and layout of any outbuildings can be significant in determining whether the land is ‘garden or grounds’. The presence of domestic outbuildings, areas laid out for hobbies, small orchards or stables and paddocks suitable for leisure use would indicate that the land is ‘garden or grounds’. However, the presence of commercial farming, commercial woodland, commercial equestrian use or other commercial use would suggest the contrary.

Size and proximity to dwelling

Physical proximity to the dwelling makes it more likely that the land is ‘garden or grounds’. However, land separated from the building may also fall into this category.

The size of the land in relation to the size of the building will also be relevant – a small cottage is unlikely to have a garden and grounds of many acres but a stately home may do.

The overall picture

In deciding the character of the land for SDLT purposes, it is necessary to look at the overall picture that emerges at the transaction date.

Rental Property Tax has been put under the microscope following the Budget of 2015. The tax you pay on Rental Property Income, Capital Gains Taxes and Stamp Duty are forecast to increase significantly. If you hold your property in your own name, which the large majority of the 2.3m Landlords do, you will now following the Tax changes, see increased tax bills. The amount of interest you can claim as an expense will reduce by the year 2020. This change will have serious consequences for many Landlords and force them to sell their properties, thus crystalising capital gains. To avoid this change in property tax you have 2 Solutions. 1. Move your properties into a limited company 2. Collect no rent and pay your mortgages with loans Limited Company Option If your properties are transferred into a Limited Company, you will not be subject to the new legislation, unless the rules are changed to include Limited Companies. There are a few problems you will face with an existing portfolio. You potentially will incur Capital Gains Tax CGT and Stamp Duty on the transfer. Not to mention legal costs and possibly a change to mortgages depending on your solicitor.  There are ways protect your assets and to make this transfer without the need to incur the above taxes and remortgaging. Property Investor Reward Club has a specialist Asset Protection provider who can give you advice. It would be fair to say that it is probably just a matter of time before HMRC level the playing field between sole traders and Limited companies. So what other options do you have? Asset Protection Should you be fortunate enough to have built up a portfolio for your future, the next problem is protecting it from an aggressive creditor that may materialise at the most inopportune moment. Asset protection MUST be done in advance of the creditor taking action against you and your assets. Sadly, many people wait until the potential creditor has taken action and it is usually too late to do anything. Don't make that mistake. Under certain circumstances this may not be the case. Speak with the Property Investor Reward Club specialist Asset Protection provider. Collect No Rent and Pay your Mortgage with an Advance One example could be to collect the rent due in a management company. The managment company provides you with an advance in a fiduciary capacity. You therefore receive your money as an advance to pay the mortgages. This circumvents the latest legislation as your property is in Trust and means you do not pay tax on the rental profits if there were any. Stamp Duty As property values rise SDLT, Stamp Duty, is becoming a large cost which solicitors are making material errors calculating your liability. Property Investor Reward Club have partnered with the UK's number 1 expert in this field who will successfully reclaim what has been over paid for you.

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In last month's Budget, Chancellor of the Exchequer, the Rt. Hon. Philip Hammond MP, announced the extension of stamp duty relief for first-time buyers on shared-ownership homes.

‘Shared ownership’ refers to schemes designed to get you on to the property ladder through owning a portion of your new home whilst renting the remainder from a housing association, the best known of which is probably Co-Ownership. Backdated to 22 November 2017, the stamp duty exemption now applies to the first £300,000 on shared-ownership homes valued at up to £500,000.

You can check your potential stamp duty liability online at: www.fc-law.news/SDLT

New #StampDuty and it's Effect on the Resi #Construction Market -Open the link to read or RT-

With effect from 1st April this year, the additional rate of Stamp Duty Land Tax (SDLT) came into force for purchases of residential property.  So the existing residential SDLT rate of 2% for the £125k – £250k band will be 5% for the purchase of an additional residential property and so on for the other existing rates. The higher rates will apply to most purchases of additional residential…