BUY-TO-LET & SECOND HOME STAMP DUTY CHANGES FROM APRIL 2016

WHO IS AFFECTED?

Those buying a buy-to-let property or a second home will face higher stamp duty tax bills.

WHAT ARE THE CHANGES?

In the Chancellor’s Autumn Statement he announced higher rates of stamp duty will be charged on property purchased for buy-to-let purposes (above £40,000). Under new rules, 3 per cent will be added to every single stamp duty band for buy-to-let and second homes – including the previously tax free element.

For example for someone purchasing £275,000 home, the current rate of stamp duty means a £3,750 stamp duty bill.

This is worked out by;

0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 =£1,250
Total SDLT = £3,750

But adding the 3 per cent surcharge will see the price of the tax rocket for landlords.

3% on the first £125,000 = £3,750
5% on the next £125,000 = £6,250
8% on the final £25,000 = £2,000
Total SDLT = £12,000

WHEN ARE THE CHANGES COMING INTO EFFECT?

From 1 April 2016

CAN LANDLORDS OFFSET THESE COSTS?

Yes. They can claim stamp duty back later against capital gains tax bill.

If they sell up their property later at a profit, they can offset purchase costs against any eventual capital gains trust, which includes stamp duty.

If you have any questions or concerns over this latest announcement, please do not hesitate to contact us or e mail us for further assistance.

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