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Stamp Duty Land Tax Refund

Transferring BTL into a Ltd Co to reclaim additional stamp duty paid on main residence

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My client lived in rented accommodation and then also bought a buy to let property himself to rent out.

He subsequently bought a main residence to live in himself and had to pay the additional stamp duty on this (as he already owned a BTL).

Now he is looking to trnasfer the BTL into a company. So he will be left with just his main residence with a view to claiming back the additional stamp duty he paid when he bought the main residence. This is all done within the 3 year time period for claiming back stamp duty. 

My questiosn is whether he could still claim back the additional stamp duty as even though he is personally disposing of his BTL property, it is being transferred into a company where he is the sole shareholder/director. Legally it is a transfer of ownership, but he will be a connceted party so could he still claim back the additional stamp duty he paid when buying his main residence?

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By The Dullard
06th Aug 2021 12:58

He can't claim the SDLT paid on the acquisition of the main residence, irrespective of what he might do with the BTL now. He had another interest in a dwelling at the effective date and the new main residence is not a replacement for a previous (owned) main residence.

There will be SDLT on market value on transferring the property to the limited company, and there may be CGT too.

Why doesn't your client get an accountant?

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Replying to The Dullard:
Psycho
By Wilson Philips
06th Aug 2021 13:07

Worth expanding to say that the SDLT on transfer into the company would be at the additional rate so even if he were able to claim back the additional rate on MR (which he can’t) the saving would be on the difference in values only.

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Replying to Wilson Philips:
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By Alex999
06th Aug 2021 14:51

Yes I agree with your points (bar the final one), but when he purchase his main residence he had to pay "additional stamp duty" because he already had a BTL, then if he deposed of the BTL within 3 years he could then claim back the "additional stamp duty" he paid on his main residence.

I agree though that there will be additional stamp duty to pay on the transfer if the property is put into the company, but the repayment may go someway to pay for this (there's little profit so no CGT).

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Replying to Alex999:
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By Justin Bryant
06th Aug 2021 15:07

You've completely missed the point here. Transferring the BTL to the company achieves nothing here, except more SDLT. It will not achieve a refund of 3% SDLT as it was not his previous main residence in the 1st place.

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Replying to Alex999:
Psycho
By Wilson Philips
06th Aug 2021 15:07

What makes you think that disposing of the BTL would enable him to recover the additional charge on purchase of MR?

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Replying to Wilson Philips:
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By Alex999
06th Aug 2021 16:23

Yes I have now re-read the rules and it seems the 36 month rule only relates to the situation where the purchase involved having 2 main residences.

The situation where the original property was a BTL property which was subsequently disposed off falls outside the 36 month rule (as it was a BTL and not a main residence), so they are stuffed.

Thank you for your assistance on this matter....

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By gillybean04
06th Aug 2021 16:25

"Transferring BTL into a Ltd Co to reclaim additional stamp duty"

Is it ever a good idea to make financial or tax decisions based on just one element, rather than looking at the bigger picture?

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