Extending your Lease? Are you a Flat Owner? Property Owner? Aware of the Stamp Duty changes?……Read on.
If your premium exceeds £40,000, when you come to extend the lease of your flat, then you could well be in for an extra bill. The government introduced a new higher rate of stamp duty (surcharge) last year in April – with the premium being 3% normal cost of stamp duty.
Main changes to buy-to-let stamp duty
The government put in place changes to the stamp duty in order to attempt the ease of rising house prices. Experts believe that buy-to-let landlords have pushed property prices higher and higher, which in turn hinders first-time buyers from getting their foot on the property ladder.
The changes to mortgage tax relief do not come into force until April 2017, although the stamp duty has kicked in already.
Stamp Duty Surcharge
Landlords will pay and extra 3% points on each band, when they purchase a buy-to-let property (on top of their standard rate). Standard bands as at February 2017:
- No stamp duty on properties UP to £125,000
- 2% on the portion of the sale price between £125,001 and £250,000
- 5% on the portion of the sale price between £250,001 and £925,000
- 10% on the portion of the sale price between £925,001 and £1.5m
- 12% on anything above £1.5
For Landlords and anyone buying a second home now will be hit with
- 3% surcharge on the portion of the property up to £125,000
- 5% surcharge on the portion of the sale price between £125,001 and £250,000
- 8% surcharge on the portion of the sale price between £250,001 and £925,000
- 13% surcharge on the portion of the sale price between £925,001 and £1.5m
- 15% surcharge on anything above £1.5m
Surcharge liability
Unsuspecting buyers could be caught unawares, e.g property being bought replaces the main residence, BUT that residence has not yet been sold. Call us 01628 200215 or email for help to advise on this as you can apply for a refund in certain circumstances.
Another example: if you are a relative buying a property for your son or daughter…. be aware that unless the property is bought solely in the name of your child you will be hit with the Stamp Duty Surcharge.
Homes abroad
Call 01628 200215 or email us to find out more if you own a home abroad and our buying another property in England. You could well be hit by the Stamp Duty higher rate too.
Exclusions
Mobile homes, house boats and caravans.
Charities and registered social landlords will be excluded from the stamp duty changes.
All properties worth less than £40,000 (ie if you own a property which is currently worth less than £40,000 the second property being bought will not be affected by the higher rate surcharge). Give us a shout if you find one!
For further advice call our team at AllSquare Law on 01628 200215 or drop us an email.
