Tax on freehold purchase

[poppy96]

Can anyone advise me on the tax implications on buying a freehold?

I am a leaseholder purchasing the freehold of both my flat and the one below, and after months of sorting out the details I have received a letter saying there is VAT on the sum agreed. As far as I was concerned the sum was liable to stamp duty, but as it was so low it wouldn't apply.

Is there VAT on freehold purchase and stamp duty on lease extensions?

Any help would be appreciated.

[jeffrey]

Can anyone advise me on the tax implications on buying a freehold?

I am a leaseholder purchasing the freehold of both my flat and the one below, and after months of sorting out the details I have received a letter saying there is VAT on the sum agreed. As far as I was concerned the sum was liable to stamp duty, but as it was so low it wouldn't apply.

Is there VAT on freehold purchase and stamp duty on lease extensions?

Any help would be appreciated.
1. VAT applies to goods and services.
2. VAT is NIL on residential property (zero-rated).
3. Commercial property is EXEMPT from VAT but V can opt to tax it @17.5%.
4. So your purchase price would have carried only Stamp Duty Land Tax (if >£125 000), not Stamp Duty [abolished some years ago].
5. No VAT is payable at all, except on legal fees/surveyor's fees, etc.

[poppy96]

Thanks Jeffrey, that's what I thought. Why do you think the "+ VAT" been put into the letter?

I know the vendor has been concerned about capital gains tax - could this be connected to that?

[jeffrey]

Thanks Jeffrey, that's what I thought. Why do you think the "+ VAT" been put into the letter?


V might do it as automatic reflex if otherwise usually deals with commercial property.

V's CGT liability does not affect you or the transaction at all.

[poppy96]

So there is absolutely no VAT liability for me in this transaction, whether buying the freehold or the lease extension?

The letter is from the vendors solicitor, which is why I am concerned. I have tried to speak to him but he won't take my call. My solicitor is off sick today but I will get him to sort this out on Monday. An extra £3k is not an option!

[jeffrey]

So there is absolutely no VAT liability for me in this transaction, whether buying the freehold or the lease extension?

The letter is from the vendors solicitor, which is why I am concerned. I have tried to speak to him but he won't take my call. My solicitor is off sick today but I will get him to sort this out on Monday. An extra £3k is not an option!

1. VAT? No, nix, niet, pas du tout, nil, zero, negative, none at all; is that still not sufficient?

2. V's solicitor is not being rude- he/she is NOT ALLOWED to speak to you, as another solicitor's client, because of potential for:
a. breach of duty by V's solicitor to V as client; and
b. conflict of interest.
I understand your anxiety but please liaise only with your own solicitor (piper/calling tune? dog/barking yourself?)

[poppy96]

:o Sorry, am more than a bit anxious about it, and I only called him as my solicitor is off sick. I am reassured by your replies - many thanks again. Have a good weekend.