From 1 April 2016 the government will introduce higher rates of stamp duty land tax on purchases of additional residential properties. This has been the subject of a consultation document which has now been published. The government proposes to introduce higher rates of stamp duty land tax, which will apply to the majority of purchases if, at the end of the day of the transaction, individual buyers own two or more residential properties.
The higher charge will not apply if the purchaser is merely replacing their main residence.
As the proposals stand at present, the current rates of SDLT will increase by 3% if additional properties are purchased with a value in excess of £40,000, and will apply to the whole property, not just the amount that exceeds £40,000.
For example if an additional home is purchased for £250,000, 3% will be due on the first £125,000 (as opposed to 0%) and 5% will be charged on the remaining £125,000 (instead of 2%). Certain transactions will be exempt such as caravans, house boats, time shares and mobile homes. Furnished holiday lets will, however, fall within the charge.
The consultation process closed on 1 February 2016. The final design of the new rules will be revealed in the budget on 16 March 2016. So if you are considering buying a second residential property, you need to keep a close eye on the budget announcements.
For further information please contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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