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UK Tax Alert | Property Owners can 'Return' 3% Stamp Duty If it is considered uninhabitable

UK Tax Alert | Property Owners can 'Return' 3% Stamp Duty If the Property is considered uninhabitable and needed a large amount of work to make the property fit for habitation.


Ways of claiming back Stamp Duty Land Tax (SDLT) of additional 3% stamp duty surcharge for owning multiple properties under certain circumstances


Although UK housing policy differs from that of Hong Kong, UK government adopts the same approach to tackle the hot property market by imposing additional 3% stamp duty surcharge not matter whether the property is hold by individuals or companies. The upside is the additional stamp duty rate surcharges charged by UK government is not as high as those imposed by HK government.


There are two ways to claim back the additional stamp duty surcharge. One is, when you sell your primary residence within three years, you can apply for a refund of this additional 3% stamp duty surcharge. Another one is if the property is considered uninhabitable and needing a large amount of work to make the property fit for habitation. You will need to prove to the HMRC that this property is "no longer suitable for residential use" in order to refund this additional 3% stamp duty. If your property is considered ""unsuitable for residential use" due to its uninhabitable state, then, the property should be considered as a "non-residential property" and Non-residential properties do not require the payment of this additional 3% stamp duty surcharge. Therefore, if the buyer paid this extra 3% stamp duty when buying this property, it is equivalent to a "tax overpaid" because the conditions for paying the tax were not met. In such a case, you can apply for a refund of this 3% stamp duty.


It might sound a bit tricky, but it's possible in reality, and there are many case studies to prove it. In fact, several court cases have clarified that if a property is not suitable for residential living, it would be classified as non-residential property. I have previously successfully applied for a stamp duty refund for a Hong Kong property owner who unfortunately purchased a 'decrepit' property.


'uninhabitable' tax return has sparked controversy in recent years However, this method of reclaiming taxes has been questioned for a few years, and some voices believe it benefits buyers. In 2019, Mr. Bewley bought a house and land. The house had no boiler or heating equipment, and there was asbestos around the property. After he submitted a tax return to HMRC, Bewley was approved to demolish and rebuild the property. So, he and his wife demolished the old house and built a new one. The point of contention is that Bewley owns more than one property but does not have to pay this additional 3% stamp duty tax.




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