In its latest attempt to discourage buy to let and second homes HMRC intends to introduce additional stamp duty for those people purchasing second properties from April 2016.
So here we have a look at what the rules mean for you.
Its quite simple, really, if you purchase residential property after April 2016 and you already have an interest in an existing property then you will pay an additional 3% stamp on top of the normal rate.
There are some exclusions
- If the purchase price is below £40,000 then the extra amount does not apply, but it does apply to the whole amount if the value exceeds £40,000
- Mixed properties, in other words, properties with parts that are commercial are excluded from the charge.
- The property is part of a large group of properties [in excess of 15]
- There are special rules to cope with those buying a replacement property
Where one is replacing a property but hasn’t sold the previous property then the extra stamp duty is paid and then reclaimed if the previous property is sold within 18 months.
Parents also need to be careful when helping their children to buy. Any ownership in a second property triggers the extra stamp duty on the full purchase price. So avoid owning the property – either lend them the money with a charge or act as guarantor.
The government is asking for your input on the new rules and consultation is open until 1st February 2016.
So if you’re considering a purchase over the next year, then the timing of such a purchase could be very important, talk to us if you would like advice.
Jason Seagrave | Partner | Seagrave French
0115 941 5193 | firstname.lastname@example.org