Stamp duty on trading houses
We have found a house we want to buy at £375K. The owners of the house want to buy our house for £575K. What is the position on stamp duty for both parties? Are there any other considerations?
After completion, you must send a Land Transaction Return to the Revenue and Customs Stamp Taxes Office providing details of the value of the house you have acquired. Previously, stamp duty was normally only payable on the amount of any balancing payment. If the difference in value of two exchanged properties was less than the lowest threshold for the payment of stamp duty, nothing was payable by either owner. However that all changed when the government introduced Stamp Duty Land Tax (SDLT) in 2003. Now, only limited categories of exchanges of property are exempt from SDLT. An exchange between private individuals is not one of them. You and the owner of the other house will each have to pay SDLT on the full value of the property acquired. The valuation that you obtained at the outset may also now have another use. If the value of your new house is close to one of the SDLT thresholds such as £120,000 or £250,000, then a valuation carried out at the beginning of the transaction will be a useful piece of evidence if Revenue and Customs seek to claim that your house is actually worth more than you say it is, and that you should be paying SDLT at a higher percentage rate.
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