Are you an investor, or perhaps just a homeowner thinking of purchasing a buy to let property to supplement your income? If so, you might be aware that as of April 1st 2016 any additional property, such as a second home or a buy to let that costs more than £40,000, will be subject to the additional LBTT supplement of 3% tax on the purchase price.
The Scottish Government decided to replace the Stamp Duty Land tax last year, which is still in use in the rest of the UK, with the Land and Buildings Transaction tax. The new legislation is very similar, but one of the main differences is a slightly higher threshold of purchase price before standard tax is levied on the property. More information about it can be found on the official website here.
In the 2015 Autumn Statement the UK Government announced a five point housing plan. Its aim was to re-focus support to first time buyers. Part of that plan, which can be viewed here is the introduction of this additional 3% tax on the purchase price of second properties. Whilst the LBTT is slightly different to the Stamp Duty Land tax, it too plans to introduce this 3% tax as of April 2016. This means that
There are instances where a refund of the additional taxation would apply. For example, as many have experienced, the property market is not as fluid as it once was. Houses are taking longer to sell, and sometimes people will buy their next home whilst still trying to sell their other property. If in this instance the original property was classed as the owners’ main residence and the new property is the new main residence, as long as the old main property is sold within 18 months the owners’ would be eligible for a refund on the 3% additional tax they paid on the new house.
So, the bottom line is, if you are a current home owner and you’re thinking of investing in the likes of a buy to let property, do it now. Any transactions completed before April 1st of this year will avoid the new taxation, and could save you a significant amount of money.