Is buying a second home now out of my reach?
Mar 10, 2017
Most of us will have heard about the new stamp duty costs for anyone buying a second home by now. The increased rates were introduced nearly 12 months ago, in April 2016. In summary, the new rates mean that anyone who is buying a second home, will pay an additional 3% on top of the Stamp Duty Land Tax costs they would normally pay.
These new regulations can have unintended repercussions for some people, particularly those who are going ahead with a purchase before they’ve sold their previous property or couples who are looking to buy a property together, when one of them already owns a property.
But what are the new rules and is there any way to get back the additional stamp duty you would have to pay if you own a second home?
The new rules result in an extra 3% of stamp duty land tax. The table below show the amount you normally pay and the amount you’ll pay if you purchase a second home:
Value of Property Normal SDLT Rate Second Property Rate
Up to £125,000 0% 3%
The portion from £125,001 to £250,000 2% 5%
The portion from £250,001 to £925,000 5% 8%
The portion from £925,001 to £1.5 million 10% 13%
Any amount over £1.5 million 12% 15%
If you are replacing your main residence, and that property has already been sold or will complete before or at the same time as your purchase, you won’t pay the additional stamp duty. But if the sale does not complete before your purchase, you will need to find the additional 3% stamp duty.
You can apply to get back the higher rate of stamp duty you paid if you sell your main residence within 3 years of paying the higher rate of stamp duty, but there are conditions to getting this money refunded, so make sure you check as you must complete the application for the refund within 3 months of the sale of your previous main residence.
If you own a property abroad, you will also pay the higher rate stamp duty if you buy a new home here in England, Wales and Northern Ireland.
There are many complicated scenarios relating to the new stamp duty land tax rules, and if in doubt, speak to your conveyancing solicitor to check if you have to pay the additional rates.
If you need help and advice about the amount of stamp duty land tax you’ll pay when you move, call our Conveyancing Team now on 01264 353411, via email: email@example.com or contact us via our free, no obligation, online enquiry form and we’ll be happy to help.
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