The Finance Bill 2009 contains a new relieving provision which provides that a house builder selling a new house can take an existing, second-hand house (the “old house”) as a trade-in against the purchase of a new house without incurring an immediate Stamp Duty charge in respect of the transfer of the old house. The relief applies to instruments executed on or after 7 May 2009 and on or before 31 December 2010 and will act as a deferral only.

When will stamp duty be chargeable?

Any Stamp Duty deferred under the new scheme will become immediately payable (i.e. clawed back) by the house builder on the earlier of:

  1. the date on which the old house, or part of the old house, is conveyed or transferred by the house builder to another person; or
  2. 31 December 2010. If the Stamp Duty is not paid immediately upon the occurrence of one of these events, interest will accrue.

What property does this relief apply to?

The relief applies to a building or part of a building used or suitable for use as a dwelling and includes gardens or grounds of up to one acre.

Where land in excess of one acre is conveyed to the house builder as part of the transaction, the value of any such excess land shall be chargeable to Stamp Duty.

The legislation refers to a “new house” as meaning a house that has not been previously occupied or sold and an “old house” as meaning a house that has been occupied.

What if the old house and new house are not of equal value?

If the houses being exchanged are not of equal value, an equality payment can be made. Any such payment must be in cash. Stamp Duty on the old house will be paid on the value of the old house.