26
Feb
Stamp Duty Increases for Buy-to-Let Landlords
Buy-to-let landlords are set to be hit with new costs from April
when a controversial extra 3 per cent stamp duty charge is
introduced.
The Autumn Statement of 2015 saw George Osborne make further
changes to stamp duty land tax (SDLT), which is payable on the
purchase of property in England and Wales.
From 1 April 2016, higher rates of stamp duty will be charged on
second homes, including buy-to-let properties. The additional tax
raised will be used to fund affordable housing initiatives, and
reflects current government housing policy to encourage first time
buyers.
The rate of SDLT charged on second homes will vary depending on the
purchase price of the property – the higher rate will be 3%
above the current SDLT rates up to 13% for the most expensive
properties. The Government has confirmed that higher rates of tax
will not be charged on residential property purchased by corporate
investors or investment funds.
Are these changes bad news for property investors? Residential
properties (other than a main residence) are also subject to
Capital Gains Tax (CGT) on a sale. Property investors will be
pleased to note that the costs of acquiring the property, including
any increased SDLT charged, may be offset against chargeable gains
in order to reduce any tax liability on a future sale of the
property.
Many have commented that the changes have created a degree of
uncertainty. There are many situations where a person may have a
second home which is neither a holiday home nor a buy to let, for
example a new main residence may be purchased before the old one is
sold, and it is not clear how the new SDLT regime will apply. The
government consultation has now finished and the results will be
published in the upcoming weeks.