If you have bought property which is uninhabitable or unoccupied and in a state of disrepair or neglect, it can be considered to be non-residential property for the purpose of Stamp Duty Land Tax (SDLT). As per the definition provided in the Finance Act 2003, derelict or dilapidated property would fall under the category of “non-residential” which includes any land or building that is not used or suitable for use as a dwelling.
The rate of Stamp Duty Land Tax is lower for non-residential properties, so if you have paid the full rate for residential property, you could be eligible to reclaim tax.
How much stamp duty could you reclaim?
Obviously this depends on how much you paid for the property in the first place, and the rate of Stamp Duty Land Tax which was applied to the purchase. There’s also a time limit for reclaiming your overpaid stamp duty. Our tax director recently reclaimed £130,000 in Stamp Duty for a client, so it’s worth looking into if you’re in any doubt!
Is this set in law?
Yes. In the case of P N Bewley Ltd v HM Revenue and Customs, the First-tier Tribunal (Tax Chamber) found that a derelict bungalow should be treated as non-residential property. HMRC incorrectly considered whether the property could be renovated, whereas the correct assessment ought to have been whether it could be occupied as a residential dwelling at the time the land transaction completed. This decision has been considered as a leading case in the interpretation of stamp duty land tax rules for derelict property.
Who can advise on derelict or dilapidated property stamp duty?
We can. Our tax director Phil Kinzett-Evans and his team have reclaimed stamp duty land tax for many clients, because they understand tax law and can ensure legitimate and successful claims. While your legal team may have given you good advice, we often reclaim for clients whose solicitors did not understand the nuances of the tax system well enough to save their clients money.
More information
Case summary from ICAEW : SDLT and dilapidated dwellings | ICAEW
Do get in touch below if you would like SDLT advice, before, during or after your property purchase. Taking advice could save you a significant amount.
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