Stamp duty on multiple property transaction

Stamp duty on multiple property transaction

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Looking for clarification on this as getting conflicting advice via another accountant and solicitor. I have simplified the details below.

Company A owns 2 properties (on a single title though so in theory single property?)

Company A wants to "sell" properties to person A to remove them from company A and into personal name for various reasons

Person A is also sole shareholder and Director of Company A

Properties combined value £200K but individually £100K each and therefore under SDLT threshold.

Is stamp duty payable on this transaction if property split onto two separate titles and then conveyed out of company into individuals names as two separate properties?

If the answer is yes as linked transactionthen if this is carried out one property at a time, potentially with a gap of many months or even years, does the same issue occur?

Replies (18)

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Portia profile image
By Portia Nina Levin
21st Nov 2014 10:39

Consideration?

What is the frigging consideration? Is any debt being assumed by A? Is A actually paying anything?

If there is not any consideration then there is not any SDLT.

If there is consideration then they are linked transactions (however you structure it), but then you do not go on to bloody well say whether or not they are residential dwellings (which would negate the effect, at least to some extent, in any event) either.

You have written five paragraphs more than the average OP bothers to write, but you have still omitted vital information.

This is why Portia gets cross.

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By awoodj
21st Nov 2014 10:58

Was trying to keep it simple

Ok was trying to keep it simple but here is the info you requested

Consideration: Person A has a Directors Loan to the company which will be offset against the transfer of the properties so no actual cash will change hands but effectively the asset transfer will pay down the Directors loan owed to person A by the company. My understanding is that the transfer has to happen at market value so that would be the nominal value put on the transfer.

The properties are two residential flats which have been refurbished and intention was to sell but this has at least temporarily been changed to rental but the company they are held in is a trading/Property development company and desire is to move properties out of that s it does not potentially taint trading status.

Down the line when transferred to the individuals name there may well be finance raised on the properties but this could be in a months time, 2 years or never so I don't think this comes into the equation at this time?

Happy to provide further details if required and to avoid further upset.

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Portia profile image
By Portia Nina Levin
21st Nov 2014 11:24

There is no market value

Market value generally only applies when a person transfers an interest in land to a limited company with which they are connected, but not the other way round.

The loan account being repaid is the consideration for SDLT purposes.

They are linked transactions, but you will get multiple dwellings relief, meaning that the rate of tax is determined by the average value of the two properties.

There are non SDLT considerations, such as a deemed MV sale (or CGT disposal if they have already been appropriated to fixed assets) in the company, and a dividend in specie or employment income charge to the extent that market value exceeds the amount of loan that is being repaid.

There is also a deemed supply for VAT purposes, which will be exempt, and may have implications if any input VAT was ever claimed on the refurbishment.

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By awoodj
21st Nov 2014 11:27

Ok that's all clear then, I guess only outstanding is what makes them linked? For example if one property is transferred out tomorrow and the other is left in the company and continues to be marketed for sale. Then if no sale is achieved in 2 months, 6 months etc so it is decided to transfer it out so available for rental, then is that still linked?

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Replying to bernard michael:
paddle steamer
By DJKL
21st Nov 2014 11:36

Does it matter here or is it a question for future transactions

awoodj wrote:

Ok that's all clear then, I guess only outstanding is what makes them linked? For example if one property is transferred out tomorrow and the other is left in the company and continues to be marketed for sale. Then if no sale is achieved in 2 months, 6 months etc so it is decided to transfer it out so available for rental, then is that still linked?

Surely given the figures, and the average for this particular transaction, linked/unlinked makes no difference as no SDLT payable if the average is £100,000 and they are each residential. Or am I missing something?

 

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Portia profile image
By Portia Nina Levin
21st Nov 2014 11:40

They would still be

A series of transactions between the same vendor and purchaser. That is what makes them linked.

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By nathanbowles
21st Nov 2014 14:26

"They are linked transactions

"They are linked transactions, but you will get multiple dwellings relief, meaning that the rate of tax is determined by the average value of the two properties" subject to the rate being a minimum of 1%. Not sure multiple dwelling relief is of any use here.

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Replying to johnhemming:
Portia profile image
By Portia Nina Levin
21st Nov 2014 14:29

Very clever

nathanbowles wrote:

"They are linked transactions, but you will get multiple dwellings relief, meaning that the rate of tax is determined by the average value of the two properties" subject to the rate being a minimum of 1%. Not sure multiple dwelling relief is of any use here.

Since we still have not been told what the actual consideration is. Perhaps the loan is £500,000 and the individual is accepting the properties in satisfaction of the loan?

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Replying to DJKL:
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By nathanbowles
21st Nov 2014 14:35

Very true. Still, the minimum rate possible using multiple dwelling relief is 1% but maybe if the individual is paying a seriously inflated price then it may prove useful.

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Replying to johnhemming:
paddle steamer
By DJKL
21st Nov 2014 17:06

Thanks, now understand

nathanbowles wrote:

"They are linked transactions, but you will get multiple dwellings relief, meaning that the rate of tax is determined by the average value of the two properties" subject to the rate being a minimum of 1%. Not sure multiple dwelling relief is of any use here.

Thanks, was not aware minimum rate of 1% if linked, even if individual sales would be at 0%.(We tend to leave SDLT matters to our solicitors)

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Portia profile image
By Portia Nina Levin
21st Nov 2014 14:52

Yes

I do agree that the minimum rate if MDR is claimed is 1%. I had ignored the actual values offered, since they were not relevant.

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By awoodj
21st Nov 2014 16:02

If the assumption was made the loan was also £200K total and it was a straight offset then that's fine or this purpose to keep it simple. The point was really in that scenario to confirm that although both properties are under the threshold individually, because linked there is a 1% SDLT charge equating to £2,000 on the transaction even though the average values are under SDLT threshold you end up paying 1% as stated. Which I believe is what is being confirmed and what I wanted to check.

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Portia profile image
By Portia Nina Levin
21st Nov 2014 16:31

Yes on those facts/amounts

The SDLT is £2K. There is then the matter of my £8K fee! :P

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By nathanbowles
21st Nov 2014 19:20

Minimum rate of 1% if applying multiple dwelling relief. Not minimum of 1% if linked. What if the consideration was £62,499 each?

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Replying to Mike Bath:
paddle steamer
By DJKL
21st Nov 2014 23:40

Sorry

nathanbowles wrote:
Minimum rate of 1% if applying multiple dwelling relief. Not minimum of 1% if linked. What if the consideration was £62,499 each?

Thanks, what I think I intended to say ,but didn't. SDLT is really not for me.

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Replying to Montrose:
Portia profile image
By Portia Nina Levin
22nd Nov 2014 10:15

Location, location, location

DJKL wrote:

SDLT is really not for me.

It very soon will not be an issue you will need to consider regularly, if I have your location correct.

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Replying to Wilson Philips:
paddle steamer
By DJKL
22nd Nov 2014 20:09

Land and Buildings transaction Tax

Portia Nina Levin wrote:

DJKL wrote:

SDLT is really not for me.

It very soon will not be an issue you will need to consider regularly, if I have your location correct.

You are correct; unless I move South, I am still reserving judgement until the Smith Commission outcome is clearer.

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By awoodj
22nd Nov 2014 15:24

Speaking of Location

I assume the same rules apply in Scotland going forward after April next year regards multiple dwellings and it's just the new calculation method based on the average value to calculate the amounts

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