Buyers can apply for a stamp duty refund uninhabitable property claim when they reassess the property they have recently purchased as either mixed residential and non-residential or as uninhabitable, in each case leading to a refund of the excess SDLT paid on the purchase at full residential rates of stamp duty. This blog focuses on uninhabitable dwellings.
If your property is uninhabitable, then it will have qualified for lower rates of stamp duty and the 3% higher rates for additional dwellings, and the 2% non-UK resident purchaser additional rates will not apply. The top rate of tax on an uninhabitable dwelling will be 5% on the slice of the price above £250,000 compared with a potential top rate of residential stamp duty at 17%.
What Qualifies as Uninhabitable?
Essentially, to be uninhabitable, the building must have serious structural issues, making it unsafe or dangerous to live in and/or dangerous asbestos. You can read more about the criteria for uninhabitable property here.
Understanding Uninhabitable Property Stamp Duty.
The potential stamp duty savings can be considerable if your dwelling is properly regarded as uninhabitable because there is a top rate of tax of 5% compared with a potential top rate of tax for residential property of 17%. For example, a dwelling purchased by a company as an investment for £1.5m where the company is owned by a non-UK resident person would normally attract stamp duty at rates of up to 17%, i.e., £166,250 whereas if the dwelling is uninhabitable, the stamp duty will be £64,500.
Can you reclaim stamp duty on uninhabitable property?
Yes, you can reclaim stamp duty on uninhabitable property. If you paid the full residential rates of stamp duty but your property was truly uninhabitable, then a stamp duty refund for the uninhabitable property claim can be made to HMRC based on the lower rates of stamp duty that should have been paid.
Stamp duty refund claims for uninhabitable dwellings must be made by post to BT Stamp Duty Land Tax, HM Revenue and Customs, BX9 1HD. My guide to making stamp duty refund claims is here.
Frequently Asked Questions
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