2010 Budget - Stamp Duty Land Tax Implications on Residential Property
08 April 2010
The Government announced a new Stamp Duty Land Tax (SDLT) rate of 5% for purchases of residential property where the consideration exceeds £1m. The effective date of this change will be on or after 6 April 2011. In this respect "the effective date" means the date of legal completion.
All other SDLT rates and thresholds remain unchanged save for the "holiday" referred to below.
It has been announced that first time buyers will be entitled to this "holiday" and the relief will apply where ALL of the following conditions are met:
- An individual (or individuals) jointly purchase a major interest in residential property (a major interest is defined as a freehold interest or a leasehold interest with more than 21 years left to run. Mixed use property does not qualify and neither do purchases by corporate bodies, partnerships or, with limited exceptions, trustees).
- The consideration is more than £125,000 but not more than £250,000.
- The individual (or all of them) intends to occupy the property as their only and main home.
The individual or individuals have not previously purchased a major interest (or its equivalent) anywhere in the world. (If there is more than one buyer then all of them must be first time buyers. Similarly, if a person has previously owned inherited property, then they are not a first time buyer).
- The effective date (see definition above) of the transaction is on or after 25 March 2010 but before 25 March 2012.
At present the SDLT rate for a purchase of residential property where the consideration is more than £125,000 but not more than £250,000 is 1% and applies to all buyers.
Whilst this "holiday" appears to be good news for buyers it is understood that a number of first time buyers are still struggling to raise the deposits which are now required by the major lenders before they will issue a mortgage offer.
It would appear that the Government is hoping that any significant reduction in revenue attributable to this "holiday" will be off-set by the rise in the SDLT rate of 5% for properties worth in excess of £1m.
Clarkslegal, specialist Real Estate lawyers in London, Reading and throughout the Thames Valley.
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