We here at Capron & Helliwell understand that every penny matters, especially when investing in second properties. Before looking into estate agents and viewing potential properties, make sure you know the impact of Stamp Duty Land Tax (SDLT) on your budget.
Standard SDLT is normally due only from property purchases (but not sales you will be please to know) over £125,000. - at 1% of the property value with the percentage increasing based on property value brackets set by HM Revenue & Customs. This is still the case where you are selling your main residence and buying a new main residence simultaneously. However, since 31st March 2016 if you already own your main residence and you are buying another property, or there is a delay between the sale and the purchase of your main residences, you will pay the standard rate plus an additional 3% tax on the value of the property over £40,000.
The higher rates of SDLT can also impact relatives looking to help younger relatives get on the property ladder by buying/contributing to the property outright, being named on the relative’s mortgage or by having a monetary interest recorded against the property.
The higher rates of SDLT may also impact younger relatives when purchasing a property with an annex for an older family member also known as “Granny Annexes”. Broadly, if the annex is worth more than one third of the total price then higher rates will apply, also the annex must be self-contained. Potentially if you are buying more than one property in a single transaction Multiple Dwellings Relief might minimize your tax bill.
The good news about the higher rates is, if you are looking to sell your previous main residence after your purchase of the new one, that the higher rate can sometimes be refunded.
Here on the North Norfolk coast, many people want to benefit from the beautiful countryside we live in by buying holiday chalets. Mobile/park homes, caravans and houseboats do not come under SDLT rules as there is no land involved. Many holiday chalets will be affected by SDLT, however as they are often classed as fixtures to the land. Even if there are restrictions on what times of year you can use the chalet, it may still be classed as an additional property.
If you are looking to purchase additional property, come and speak with us here at Capron & Helliwell as to SDLT, other conveyancing costs and your options as to minimizing the impact of SDLT.
This article was written on 17 January 2019 and the law may change following this date.
This article aims to supply general information but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek specific advice.
Capron & Helliwell offer a fixed fee first appointment for family law matters - for details or to book an appointment please contact Tina Phillippo on 01692 581231 or email her at email@example.com