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Stamp Duty for second properties: Everything you need to know

Everything you need to know about stamp duty for second properties.

Anyone buying an additional residential property or a buy to let within the UK will be liable to pay a 3% surcharge in Stamp Duty above that of a solo homeowner or first time buyer. This was announced in the Autumn statement by George Osborne and came in to affect from 1st April 2016.

Stamp Duty for second propertiesIf caught attempting to conceal second properties by not announcing them when asked by solicitors it’s tantamount to fraud and the penalties far outweighing the 3% stamp duty loading.

If you are a couple who live separately, one a homeowner and one not, and you want to purchase a property together the stamp duty will apply. You may be able to get around this by putting the new home in the name of the partner who doesn’t already own. If you need to find a mortgage that allows join borrowers with only one appearing on the deeds you can contact us for helpful advice.

 

There are some exclusions –

  • If the home you are buying will be your main residence and is replacing your current home but you own another property already the 3% surcharge of duty will not apply. However moving out of rented accommodation when you already own a property and buying a main residence would be liable for the 3% duty fee.
  • If you need to buy another main residence before selling your previous home you will need to pay the additional duty initially, but this amount can be refunded providing the property is sold within 36 months.
  • Married couples living separately, where that is likely to become a permanent arrangement, will not be treated as ‘one unit’ for the purpose of the 3% surcharge. E.g. If you want to buy a property but your legal spouse already owns then you will not have to pay the 3%.
  • If you own a limited company we are awaiting feedback from the treasury on whether properties purchased through the company will be liable for the 3% duty. A keen eye will be placed on new LTD. Companies to prevent them being set up with the aim of purchasing duty free property.
  • Social landlords and charities will not be liable to pay the 3% stamp duty surcharge.
  • Property purchases under £40,000 will not be liable to pay the 3% stamp duty surcharge.
  • No stamp duty is payable on inherited properties. If however you go on to buy a second home without selling the inherited property you will be liable to pay the 3% surcharge on the new purchase.
  • If you own a share (50% or less) in property that’s been inherited in the 36 months prior to buying a second home, the inherited property will not be considered a second home and you can make your purchase without the 3% duty.

If you have any questions about your mortgage options please don’t hesitate to contact Kevin or Ollie at Number One Mortgages for expert financial advice on 01273 736536.

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