Could a tax tribunal ruling mean BTL investors avoid 3% stamp duty surcharge?
Mary-Anne Bowring 27/03/2019
1759
Buy-to-Let Investors Could Seek Stamp Duty Surcharge Refunds
Buy-to-let investors may soon flood HMRC with refund requests for the 3% stamp duty surcharge. This follows a recent tax tribunal ruling in favor of a couple who acquired a neglected property and successfully challenged the surcharge. The decision could set a precedent for other investors looking to reclaim their additional stamp duty payments.
The Case That Sparked the Debate
Paul and Nikki Bewley purchased an uninhabitable bungalow in Weston-super-Mare. Planning to demolish and rebuild, they believed they were not liable for the extra 3% stamp duty surcharge, which applies to second homes. However, HMRC disagreed and insisted the charge applied.
HMRC’s Argument and the Tribunal’s Verdict
HMRC maintained that the 3% surcharge was due because the property could potentially serve as a dwelling in the future. However, the tax tribunal ruled in favor of the Bewleys, stating that a property must be in an immediately habitable condition for the surcharge to apply. HMRC is still reviewing the ruling and has not yet decided on an appeal.
Implications for Buy-to-Let Landlords
This ruling suggests that buy-to-let investors purchasing uninhabitable properties may be exempt from the 3% surcharge. It could also encourage landlords who have already paid the charge on similar properties to seek refunds from HMRC.
Potential for Past Refund Claims
Commercial Trust Limited, a specialist buy-to-let broker, believes this decision opens the door for retrospective claims. Landlords who previously purchased uninhabitable properties and paid the surcharge may now have grounds to request a refund.
What Happens Next?
With HMRC still considering its response, the long-term impact of this ruling remains unclear. However, if upheld, it could significantly reduce stamp duty costs for buy-to-let investors and lead to a surge in refund claims for past property purchases.
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