We own two properties in England, the second being a holiday home. From April 2016 the Chancellor will increase stamp duty by a further three per cent when buying a second home.
If we were to move, selling our main residence after April 2016 and buying another, while keeping our second home, do we incur the extra three per cent stamp duty?
Can you clarify this for us and any possible means of legally avoiding it. A.M.
Stamp duty puzzle: Will we face a higher tax bill when we move main residence because we own a second home?
Lee Boyce, consumer affairs editor at This is Money, replies: These stamp duty changes made by George Osborne in the 2015 Autumn Statement caught everybody by surprise.
Buy-to-let investors and those looking to snap up a second home after April 2016 will see their stamp duty tax bill rocket – and in many cases, more than triple.
Currently, buyers pay no stamp duty on the first £125,000, then two per cent on £125,000 to £250,000 and five per cent per cent above £250,000 to £500,000, rates continue to step up above this.
For those buying a buy-to-let property or second home, stamp duty will be three per cent on homes up to £125,000, five per cent to £250,000 and eight per cent to £500,000.
This adds a lot to the cost of buying. For those snapping up a £275,000 buy-to-let or second home for example, the current rate of stamp duty means a £3,750 bill. From April, for investors and second home owners, it will be £12,000.
There are bound to be many circumstances – such as yours – where the way the goalposts have moved, mean that things are not being made as clear as could be by the Treasury.
If things had been made clearer, you wouldn’t be needing to contact us. So what is the answer?
A Treasury spokesman replied: In this scenario – as long as the person replaced their main residence, they wouldn’t be hit.
Lee Boyce adds: This is good news for you and all other second homeowners and buy-to-let landlords.
A scenario where people were hit for moving their main residence just because they owned additional property would have caused many headaches.
Let’s hope George Osborne doesn’t dream up that tax wheeze next.
TIPS, TOOLS AND HELP FOR LANDLORDS
Guides and tools
This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.