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Stamp Duty on Second Homes

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From 1st April 2016 the purchase of a second residential property is liable to a surcharge Stamp Duty payment.  Anyone buying a property who already own one or more existing properties, will have to pay the surchargeon any purchase price over £40,000.00.  The new rates on additional properties are as follows:-
 

Purchase price

Stamp Duty Payable

£40,000.00 up to £125,000.00

3%

£125,001.00 up to £250,000.00

5%

£250,001.00 up to £925,000.00

8%

£925,001.00 up to £1,500,000.00

13%

£1,500,001.00 and over

15%

 

As an example, the purchase of a Buy to Let or second property at £60,000.00 would be liable to Stamp Duty at £1,800.00. 

The following should be considered:-

  • For the purposes of this legislation, property owned solely by a husband or wife is taken to be owned by them both jointly. As such, if a husband owns a property in his sole name, his wife would be liable to pay the higher stamp duty payment on a property she purchased and vice versa.
  • If your share in a jointly owned property is valued at less than £40,000, a purchase of a further property would not be liable to the higher stamp duty rates.
  • If you already own a number of properties but wish to sell your main residence and purchase a replacement main residence ( at the same time) the higher stamp duty rates will not apply.
  • If you already own property and wish to purchase a further property with a joint purchaser who does not already own other property, you will have to pay the higher stamp duty rate on the full purchase price.
  • Should you buy a second property to live in, you will be required to pay the higher stamp duty rate. However, if you then sell your first main residence property within 3 years, you can claim back the additional stamp duty paid.
  • The ownership of other property is not restricted to properties owned in the UK. So properties owned outside of the UK need to be taken into consideration when checking property ownership.
  • Rules relating to trust or inherited property are complex and ownership of such a property may give rise to the additional rates being levied.
  • Purchases by companies of  residential property will be subject to the surcharge even if it is the first property that company will own.

The rules are very complex and there are a number of criteria which needed to be checked very carefully for each specific transaction. You cannot assume it will not apply to your transaction and it is best to get advice before you make an offer to see where you stand

For further information or advice relating to payment of stamp duty on second properties, please do not hesitate to contact a member of our residential or commercial property teams via phoning 0800 083 0815 or using the contact form on this page.