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My client is a developer and has recently sold 5 properties. The remaining property is proving difficult to sell and the client has offered to buy the existing house of customer who wanted to buy the final property in part-exchange, and the customer’s house will be let pending eventual sale when the market improves. what are the VAT and SDLT implications of this transaction?
VAT:
Sell of the 6th property is first grant of major interest of a dwelling and hence zero rated.Purchase of existing property, letting and its eventual sale are VAT exempt and the related VAT costs cannot be recovered unless its under deminus level.
SDLT:
FA 2003 Sch 6A, exempt SDLT on acquisition by property developer from individual acquisition new building if the conditions below are met:
– New building being sold to individual
– New building to be used as main residence
– Old building previously occupied as main residence at some time in the last 2 years
– Developer does not acquire area of land at old building beyond permitted area
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