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Changes to Stamp Duty Affects Second Home Buyers

Most people are aware that buying a residential property involves paying Stamp Duty Land Tax (SDLT) if the property you are purchasing is over £125,000; however, from 01 April 2016 the government introduced a new higher rate of SDLT for anyone who purchases an additional residential property (typically, a buy to let or second home).

This means that if you own more than one property on the date you complete your purchase, you will need to pay this new higher SDLT rate.  Also, if you are purchasing a property jointly with someone else who owns one or more properties, the higher SDLT rate will apply.

This higher SDLT rate also applies if you own a home abroad, even if this property is a holiday home and you are buying an additional property in the UK.

If you are purchasing a second home to replace your main residence but you have not yet sold this main residence, the higher rate of SDLT will apply.  However, you will be able to receive a refund on the higher SDLT rate you paid if you go on to sell your previous main residence within 36 months of the additional property purchase.

There are several exemptions from paying the higher rate of SDLT – for example, if the additional property you are purchasing costs less than £40,000, in transactions involving non-residential and mixed use purchases (for example if you are buying a property with a business premises below), or if you are buying a caravan, houseboat or mobile home.

 

SDLT rates for additional properties from 1 April 2016:

Purchase price                                                          Rate

up to £125,000                                                           3%

 

over £125,000 and up to £250,000                  5%

 

over £250,000 and up to £925,000                   8%

 

over £925,000 and up to £1.5 million             13%

 

over £1.5 million                                                         15%

 

For advice on any aspect of residential conveyancing, contact us on 01643 707777 or email :

 

Becky.Ross@maitlandwalker.com

Nicole.Roberts@maitlandwalker.com