1st April 2016 saw the introduction of a controversial amendment to the rules relating to Stamp Duty, resulting in one of the busiest periods ever seen in our Residential Property department as buyers sought to complete before the changes took effect.
A recent blog post detailed the new rules for first time buyers- but how does it work if you are already a homeowner? Clients still look for clarity on this point before they proceed, and with this in mind our Residential Property expert Iain Gardner looks at the procedure below.
I already own a home but want a Buy-to-Let property: will I need to pay extra Stamp Duty?
Yes. It’s the purchase of the additional property that counts. Put simply, if you already own a house but want to buy another, you will have to pay extra.
If you’re replacing your main home then you will pay Stamp Duty at the normal rates- there will be no additional cost.
How much is the additional Stamp Duty?
As with Stamp Duty generally, a tiered system operates, as shown below.
Property cost Stamp
£40,000- £125,000 3%
£125,000- £250,000 5%
£925,000- £1.5m 13%
In reality, it may not be likely that the upper percentages will apply in your case- but there are still plenty of investors whom will need to factor in the additional sums. If the additional property is being bought for less than £40,000, there will be no additional Stamp Duty to pay.
Purchasers of holiday homes need to be aware of the rules too, even if ownership is to be shared amongst a handful of people.
I’m replacing my main residence, but I will own two properties for a short time- am I still liable?
Unfortunately so- but there is a silver lining. Once your old property has been sold, you have three months to apply to HMRC for a refund of the additional sum (or within 12 months of the filing date of your self-assessment tax return.)
Your previous main residence must have been sold within 3 years of paying the higher rate of SDLT.
If you have any queries relating to the content of this article, speak to one of our Residential Property experts on 0113 284 5000. We can also provide free, no obligation quotations for our conveyancing services- so please do call today and speak to one of our friendly team.