Property investors are being reminded that probate properties can offer full or partial Stamp Duty relief, presenting a valuable opportunity for those operating within the property trading sector.
According to Auction House, one of the most overlooked exemptions in current Stamp Duty legislation applies to probate property purchases, provided buyers meet a strict set of criteria. If fully qualified, this relief could mean zero Stamp Duty is paid on the acquisition.
The exemption, as outlined in HMRC guidance SDLTM21010, applies exclusively to property traders—defined as companies or partnerships made up entirely of companies or LLPs that buy and sell properties as a business. Individuals and sole traders are not eligible.
To qualify for full Stamp Duty exemption, all of the following conditions must be met:
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The buyer must be a qualifying property trade business purchasing directly from the executors or a probate company.
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The property must have been the main or only residence of the deceased for at least two years prior to death.
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The property, including its surrounding land, must not exceed 0.5 hectares (approximately 1.24 acres).
If these three criteria are satisfied, the buyer can claim full relief by entering relief code 28 on the SDLT1 form when filing with HMRC.
However, if the property marginally exceeds the permitted land area, partial relief may still be available. In such cases, the Stamp Duty will be calculated based on the difference between the market value of the permitted area and the market value of the entire property.
While the tax relief is potentially generous, investors are being cautioned to manage the purchase carefully. Stamp Duty relief can be clawed back if the property is used in ways not permitted by the rules—for example, granting a lease, allowing occupation by employees or their relatives, or exceeding allowable refurbishment costs.
To maintain eligibility, investors must stay within the ‘permitted amount’ for refurbishment, defined as £10,000 or 5% of the purchase price, capped at £20,000. Importantly, this limit excludes safety-related modernisation such as fixing hazardous electrics or other essential repairs, offering some flexibility for necessary upgrades.
“Probate properties can often be acquired at below-market value, particularly at auction, where speed of transaction is a priority for executors,” said Oliver Prior, National Commercial Director at Auction House.
“With the right modernisation programme, these properties can be resold for a very attractive profit. But with Stamp Duty often a significant cost, remembering to apply for this exemption where eligible can make a big difference to an investor’s bottom line.”
The incentive comes at a time when investors are looking for more strategic ways to offset rising taxes and tighter margins. Probate sales, often in need of refurbishment but priced for a quick sale, offer a unique opportunity for savvy property traders—especially if they can qualify for Stamp Duty savings in the process.
