Paid incorrect stamp duty on site transfer

dellas1979

Just wondering if any one has experience of this.

I got land transferred to me in October 2016. 1/2 acre from my parents. In November 2017 I got planning permission.

I paid a stamp duty on the property of 1% (sanguinty-parent to child). However, my solicitor contacted me yesterday and said that they think they got it wrong and that I would more than likely have to pay 6% stamp duty. Because the purpose of the land changed from agriculture to a dwelling.

They made a mistake and will cover their costs and any penalty. Of course, Ill still have to pay the stamp duty (just being an unknown cost in middle of the build bleughhh).

Anyways, I was trying to find information on this to verify what they are saying, but not having any luck. Anyone know/have anything similar happen to them?

JoeA3

I am about to purchase a site (recently got planning on it) and I’ve been informed I have to pay 6%, but that 2/3rds of this is refundable when building commences. So effectively, it’s 2%.

Not sure if rules are different in your case though, where it was your parents land.

dubrov

To get the 1% rate there are conditions. I think the land has to keep being used as farmland for 6 years. Check out the citizens information site for details

I think if this condition is not met, the transaction would be classified as a commercial transaction so 6% applies. As another poster has said, I'd you start building within 2 years you can generally claim back 4%. There are conditions though.

Your solicitors job is to advise on this and he should be clearer than he thinks he made a mistake
He should know for sure

looksee

'I think I made a mistake' is solicitor speak for 'I am 100% damn sure I got it wrong but I am trying to tone it down a bit'.

dubrov

Actually, I see you bought in 2016. At that stage 2% would have applied to commercial transactions. I don't know where your solicitor is getting 6% from.

dellas1979

dubrov wrote: »

Actually, I see you bought in 2016. At that stage 2% would have applied to commercial transactions. I don't know where your solicitor is getting 6% from.

Hiya-no I didnt buy. Had it transferred to me. It was farming land.

Am being told that (apparently) the "use" of the land precedes (governs over) the sangunity (1%) of the transfer.

I had the property valued (not as an agricultural site), because I knew I was going to build. I just got it valued (about 35k) and paid 1% on this. There is now a charge on the land with the bank, based on what the valuation was (i.e., argi land would be priced lower than something with planning).

It's gas.

dellas1979

JoeA3 wrote: »

I am about to purchase a site (recently got planning on it) and I’ve been informed I have to pay 6%, but that 2/3rds of this is refundable when building commences. So effectively, it’s 2%.

Not sure if rules are different in your case though, where it was your parents land.

Yes. I got the land valued. And paid 1% stamp duty (as in 2016, transfer of a 1/2 acre site due to sangunity/parent was 1%). And off I went....well apparently not.

I told solicitor he needs to make 100% sure of all of this. To talk to a tax solicitor specifically. And not just "I think a mistake has been made". I want to try do my own research.

Yes, if I pay at the 6%, it can be claimed back (I imagine Ive to wait until next year's P60). Just middle of building sucks. Its not a huge unmanagable amount, but when youre half way through a half contractor/half self build, just sucky.

Lumen

Since no money changed hands, it seems like you could just retract the previous filling and refile with 6% of the agri value.

Also, I assume that would be beneficial in future tax treatment otherwise the 35k will come out of your lifetime allowance.

The fact is that the increase in value came when you got planning permission.

This is not legal advice and IANAL or accountant.

dubrov

You can claim the refund once you have started building. You do not need to wait for completion.

I still think you should be charged 2% though as the transfer was in 2016.

It should all work out the same anyway providing the plot is less than 1 acre