Osborne’s Second-Home Tax Rise Looming
Initial details of George Osborne’s plans to raise Stamp Duty on second homes were released last December and the final details will be revealed in the March budget.
In a nutshell, from April, there will be a three per cent surcharge on each Stamp Duty band whenever someone buys an additional residential property.
Second homes worth up to £125,000 will attract Stamp Duty at three per cent of the purchase price, while properties selling at £125,000 to £250,000 will “pay” five per cent. Between £250,000 and £925,000 Stamp Duty rises to eight per cent, between £925,000 and £1,000,000 it’s 13 per cent and houses worth more than £1,500,000 attract 15 per cent.
Here’s how the changes affect different types of buyers.
Parents buying for children
Parents buying a property for their children by taking out a joint mortgage are liable for extra Stamp Duty as they’re usually on the deeds. One solution is to act a guarantor, or give the children deposit money. They can also name just the child/ren on the deeds.
Married couples and joint owners
If a purchase means one person (or both) owns two or more properties and the person isn’t changing from one main residence to another, the extra tax is due.
The government will treat married and civil partners as one financial unit, so couples can only own one property jointly before they pay the extra tax. For example, if one half of the couple already owns a house and they buy another joint residence, the new house will attract the surcharge. This may change before the March budget, though.
Overseas home owners looking to buy in the UK
These people will be liable for the surcharge too. “Overseas” also includes Scotland. This rule won’t apply to investors buying 15 properties or more in one deal, however. It was thought at first that buy-to-let investors buying in Scotland would escape the tax, as Scotland has its own Stamp Duty rates. However, the country announced similar plans to Osborne’s – a three per cent surcharge on second homes – in December.
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