Stamp Duty Land Tax (SDLT) can be a significant additional cost if you are buying a residential or commercial property. It is levied based on a percentage of the property value with an increasing scale depending on the purchase price
When planning to make a purchase it’s essential to research the SDLT implications and know how much you’ll need to find.
Here are our top tips to remember when looking at the SDLT you will need to pay:
1 Research the current rates
SDLT rates are sometimes varied in the Budget. There is a zero rate up to a certain property value and then bands at which specific percentages apply. Current rates increase sharply on residential properties sold for more than £925,000.
2 Buy to let and second homes
The biggest change in recent times is with second homes. There is a much lower threshold at which SDLT becomes payable and, for most properties, a 3% surcharge.
If you owned a second home before April 2016 and decide to move house (change your main residence) you should not incur the higher SDLT charges on your new purchase. There are legal definitions of a main residence and it is advisable to get advice before proceeding with a purchase.
Companies and trusts set up specifically to own residential properties will pay the SDLT surcharge.
3 Married Couples and Civil Partnerships
If one partner already owns a property and either partner buys an additional property, this will be deemed to be a second home and liable to the SDLT surcharge. If you are permanently separated this does not apply.
Joint purchasers of a property, even when not married, could also incur the SDLT surcharge if one of them is an existing property owner.
4 Helping your children
If you own a property and are a signatory or guarantor of a mortgage taken out by one of your children, your name will appear on the deeds. You will then be considered to be buying a second property. Loaning your children money to help with the deposit, for example, will not count as ownership.
5 Inherited property
If you inherit a property, SDLT should not apply. However, if you subsequently purchase an additional property it will attract the higher rate of SDLT for a second property.
There’s so much to think about when purchasing a new property, sometimes you just need someone to talk the details over with. At PowellsLaw we offer an initial, free, no obligation discussion with a member of our Property team who are experts in their field and who will help guide you as smoothly and swiftly as possible to your new home. get in touch today on 01934 623501.