What To Do About The UK’s Stamp Duty Changes
As a property investor, you have probably had all you can hear about the stamp duty changes that came into effect on the 1st of April, 2016. Just to familiarise yourself with these changes, here is what they meant:
Anyone buying additional residential properties, including second homes and/or buy-to-lets, has had to pay an extra 3 percentage in stamp duty since the 1st of April, 2016.
This additional percentage applies above the “stamp duty land tax” rates that are current. What this means is that there has been a 3pc tax increase to pay on homes that are worth up to £125,000. So that translates to:
• 5pc tax (instead of 2pc) on additional homes that cost between £125,001 and £250,000.
• 8pc (instead 5pc) on homes that fall between £250,001 and £925,000.
• Homes that are worth up to £1.5m will incur 13pc stamp duty.
• Any homes over this amount will attract a 15pc stamp duty charge.
These are the basics of the changes introduced. So, what can you do about them?
You could sell original property
Since the stamp duty changes apply to second homes, there is an allowance of 36 months for any home buyers looking to buy a second property to sell their original property. By doing this, you will then get a refund on the extra tax.
You could buy new property before November of 2018
The changes also proposed a clause that allows those who sold their original homes before November of 2015 and does not currently own any homes, to buy new properties before November of 2018 without having to incur the new stamp duty charges.
You could buy a luxurious home worth more than £1 million
Of course, that price tag is a little more than most people can stomach, but if you have the funds for it, you might just be in a position to get your hands on an amazing piece of property for a steal. As a result of the stamp duty increase, there has been a decline in the sales of properties worth over £1 million.
That also means that more properties that are worth this amount have seen a reduction in price thanks to this decrease in demand. If you look around keenly, there is a good chance that you can land an excellent piece of property that might be selling at below actual market value just to stay away from the extreme end of stamp duty charges.
They say that in every dark cloud there is a silver lining to be found…somewhere. In this stamp duty charge increase debacle, you can actually find ways to trade in better, more expensive properties if you have the money to do so. It will take some looking and a whole lot of high-risk affinity, but it can be done and it might even be more lucrative than you think. It also gives you an opportunity to start dealing with foreign investors who have excellent purchasing capabilities.