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With effect from 1st April 2016 it is proposed that Stamp Duty rates on buy to let properties and second homes will change. The higher rate of Stamp Duty on these properties will mean that a 3% levy over and above the usual Stamp Duty rates is imposed.
This will apply even to those properties purchased below £125,000 on which no Stamp Duty is currently payable. The proposals are somewhat complicated and as they currently stand, state that where you purchase any second property be it for buy to let purposes or not you will be liable for the increased rate. If however for example a first time buyer decided to purchase a buy to let property it would not attract the increased rate.
If they then went on to purchase a second property as a main residence and did not sell their investment this would then attract the Stamp Duty levy. Conversely however, someone with an existing portfolio of properties would not be liable for the increased Stamp Duty rate where they were replacing their existing main residence with a simultaneous sale and purchase. In addition married couples are intended to be viewed as one unit. This means that if either one owns a property in their sole name and their spouse then purchases a property in their sole name, the increased Stamp Duty rate would apply to that transaction.
For those transactions where a new main residence is purchased prior to the sale of the existing one the increased Stamp Duty will be payable. There will however be an 18 month grace period for the levy to be claimed back from HMRC if you sell your previous home during this time.
If you wish to speak to someone regarding this article please telephone Lucie Couchman on 01746 768748 or any member of our Property Team.
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