From April the 1st 2016, higher rates of stamp duty will be charged on purchases of additional residential properties, such as second homes and buy to let properties.
We have seen a lot of confusion amongst homeowners and homebuyers as to whether these higher fees are going to impact on their property purchase. One example is;
‘We are currently living with our parents, we have been saving up to buy a house. We currently own a buy to let property, which we rent out. We are looking to buy a house in May 2016 as our main home. Will we be caught out by the new stamp duty tax?’
The answer to this question is yes. In this situation, where a property is already owned and a second property is going to be purchased the new higher stamp duty will be enforced.
Stamp Duty is charged on a sliding scale, based on the purchase price paid for the property. It will operate in a similar way to the current system of income tax, applying the the respective rates to the total property purchase price.
At this present time the only way to avoid this additional rate is to compete your property purchase before April the 1st 2016. During the next few months there will be an added pressure on the Chancellor to consider as for what constitutes a ‘main residence’. This may provide an solution as to where a second property, being used as a main residence could be exempt. However at this moment in time we can only speculate.