6b. Tax - Property Flashcards

1
Q

Stamp duty land tax

What is the amount of SDLT due based on?

A

The consideration exchanged for the property

If land/buildings are given to a company in exchange for shares, SDLT is based on the market value of the land/buildings

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2
Q

Stamp duty land tax

When must a SDLT return be sent to HMRC even if there is no tax to be paid?

A

Within 14 days of completion

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3
Q

Stamp duty land tax

What four types of property transfer are exempt from SDLT?

A

Property transferred:

  1. As a gift
  2. To a spouse
  3. To a former spouse upon divorce
  4. Under a variation of a will changing the beneficiary within two years of the decedent’s death
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4
Q

Stamp duty land tax

What do the SDLT thresholds and rates depend on?

A

Whether the property is residential, non-residential, or mixed

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5
Q

Stamp duty land tax

What is the nil-rate band for SDLT for (1) residential and (2) non-residential properties?

A
  1. £250,000
  2. £150,000
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6
Q

Stamp duty land tax

How is SDLT considered a tiered tax?

A

Because the applicable rate applies to the amount of consideration within the threshold, before applying higher rates to excess amounts

Similar to how income tax operates

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7
Q

Stamp duty land tax

By what percentage is each rate increased if a person already owns a residential property, and buys another one?

What is the lower limit for application of this rule? In what situations are the increased rates either not charged, or charged but refunded?

A

3%, e.g. the 0% rate becomes 3%; the 2% rate becomes 5%, etc.

£40,000 lower limit. Not charged where the new property replaces the purchaser’s only or main residence

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8
Q

Stamp duty land tax

How is SDLT payable on the grant of a new lease calculated?

A

Based on either or both of:

  1. Lease premium paid up front (usual rate), or
  2. Net present value of the rent payable (lower rate)
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9
Q

Stamp duty land tax

What is the upper limit of the property value for which SDLT relief is available to buyers of their first property to be used as their main residence?

What are the reduced rates when the relief for purchase of first residence applies?

A

£625,000

0% on the first £425,000; 5% on remainder up to £625,000

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10
Q

Stamp duty land tax

Where there are multiple linked transactions, what is the relevant consideration, and what is the downside of this?

What relief is available where due to totaling the considerations, the SDLT payable is more than it would be individually?

A

The total of the chargeable considerations for each transaction.

This may result in more SDLT being payable than if it was charged against each individually.

SDLT is calculated based on the average consideration, i.e. total considerations divided by the number of properties

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11
Q

Stamp duty land tax

What further relief is available when six or more residential properties are purchased in a single transactions?

A

Purchaser can choose to apply non-residential rates

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12
Q

Stamp duty land tax

What are the SDLT rates for residential property?

A
  • Up to £250k: 0% (£425k if first time buyer)
  • The next £625k: 5%
  • The next £575k: 10%
  • Remaining: 12%
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13
Q

Stamp duty land tax

What are the SDLT rates for non-residential property?

A
  • Up to £150k: 0%
  • The next £100k: 2%
  • Remaining: 5%
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14
Q

Capital gains tax

Under Private Residence Relief, what is the equation to calculate how much of the gain is exempt from CGT?

A

Gain x (period of occupation / period of ownership)

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15
Q

Capital gains tax

For Private Residence Relief, the last how many months of ownership will be treated as deemed occupation, and what is the one condition for this to apply?

A

Nine months, regardless of how long the taxpayer lived there, as long as they occupied the property as their home for some time

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16
Q

Capital gains tax

For Private Residence Relief, in addition to the last nine months no matter what, what are the three periods of absence which can qualify as deemed occupation if they punctuate periods of actual occupation?

Can they apply cumulatively?

A
  1. Any period of absence, up to three years, for any reason
  2. Any period, with no limit, where the owner is abroad for employment
  3. Any period, up to four years, where the owner is absent from the property due to working elsewhere (not abroad)

Yes