Can you still avoid Stamp Duty? Yes you can… (in certain circumstances)
Now that we’ve reached the end of the Stamp Duty holiday purchasers who haven’t completed their transactions by the end of September might have to pay an extra £15,000 of Stamp Duty to secure their property. However, as Knight Frank the estate agents point out here, if you’re selling you may have to reduce the asking price accordingly to make the property attractive.
What you will definitely need is an accurate valuation, so call us, writes Zah Azeem, Partner at Scrivener Tibbatts, the Wimbledon based chartered surveyors.
Many people of course who might have contemplated buying a second home, either as a straight investment or as a buy to let opportunity are perhaps wary of the high Stamp Duty costs.
Contrary to the perceived wisdom that the Exchequer is punishing second home purchasers tax planners Blick Rothenberg point out that if you sell your home and are able to show that the first property you buy is not intended to be your new home, then when you do buy your new home you will not be liable for the 3% surcharge provided that you buy your new home within three years of the sale of your old home.
How does this work in practice? They have a case study on their website:
Neil, who is not married and only owns one property, is fed up of living in London (as if). He wishes to move to the Cotswolds but retain a base in London. He intends to sell his London home (worth £2 million) and use the proceeds to buy two properties worth £1 million each at roughly the same time.
If he chose to buy the Cotswolds property first, then while he would not pay the surcharge on that transaction, he would when he buys the London property.
But if he chose to buy the London property first – perhaps moving into the property temporarily – and buys the Cotswolds property later, he wouldn’t pay the surcharge on either transaction, saving him £30,000.
They say that choosing to use this sequence to avoid the surcharge applying on the London pied-à-terre (or buy-to-let) cannot possibly be described as tax avoidance. Sean Randall, Partner and Stamp Duty expert explains: “Choosing to use this sequence to avoid the surcharge applying on the London pied-à-terre (or buy-to-let) cannot possibly be described as tax avoidance.
“The buyer would not be abusing legislation; rather they would be making a reasonable choice and taking advantage of a freedom from taxation deliberately offered by Parliament.
“If Parliament wished to impose the surcharge in these circumstances, it must change the law and introduce the type of rule that the Welsh Assembly passed for the Welsh Stamp Duty surcharge.”
If you would like to discuss something related to a property valuation please contact Zah Azeem, Partner, direct via email at Zah@scrivenertibbatts.co.uk or call 0208 971 2986.