Ten ways to save Stamp Duty Land Tax when buying properties.

If you a buying house no doubt you are aware that you have to pay StampDuty Land Tax or ‘SDLT’. SDLT is a tax on your purchase above £125,000 on residential properties. Here are ten government approved ways for you to save Stamp Duty Land Tax….

  1. Residential SDLT in England is different to Land Transaction Tax in Wales. The tax is on different scales in each part of the country and payable to different bodies. Buy a house in Wales and there is a good chance you will save some tax.
  2. Everyone knows about the high rate surcharge of 3% extra tax on second residential properties, but did you know you may not have to pay the high rate tax (and better still  you pay lower non residential property rates)? If the property is classed as “non residential” or if you are buying you second property pursuant to a divorce you can substantially and legitimately lower the cost. Check to see if the property is actually “residential property” and  also check whether the high rate is payable because the divorce exempts you from paying it.
  3. A garden is residential property and is taxable for ordinary SDLT and high rate SDLT if it is bought after and separately to the main property. Buy together if you can with “Multiple Dwelling Relief” if necessary.
  4. A house is not a subject to residential SDLT if it is not fit to use as a dwelling e.g It needs substantial renovation work or there is contamination with asbestos which needs clearing up before you can live in it.
  5. A plot of land is “residential property” unless the walls are not yet constructed ! If the walls have not been built yet you pay lower non residential SDLT rates.
  6. You do not have to pay high rate SDLT on multiple dwellings. If you buy a house with a flat above your garage for example, then you do not have to pay two lots of SDLT (and high rate SDLT) if the flat is worth less than one third of the overall value of the house.
  7. If you buy a shop with a flat, you do not pay residential SDLT  – which means you do not pay high rate SDLT either. A shop and flat building is classed as “mix use” and non residential and therefore you pay less tax.
  8. If you buy a portfolio of properties you can buy each property individually with ‘multiple dwelling relief’ and reduce the over all tax bill substantially
  9. Companies always pay high rate SDLT –  however there are allowances for company purchases of residential property over £500,000 in special circumstances e.g. development… or if the company already owns 15 other properties
  10. It is fine to buy a house in your sole name and for you and another person to live in if the other person already owns a residential property. You can’t buy in joint names unless you want to pay high rate SDLT. Alternatively the other person can give the other property away before buying the next one.

There are of course endless combinations of these examples! If you have SDLT queries or if you are buying a house please get in touch with use for the best advice Tel 01282 693182

Posted in

Leave a Comment