As you may be aware, higher rates of stamp duty will be charged on purchases of additional residential properties, such as buy-to-let and second homes, with effect from 1st April 2016.
The higher stamp duty will be charged on purchases of additional residential properties above £40,000. It will see 3 percentage points added to every band - including the previously tax-free element.
For example, at a purchase price of £275,000, under the normal circumstances you would pay 2% on the amount between £125,000 and £250,000 (£2500) and 5% on the remaining £25,000 (1250) - a total of £3750. However, under the new rules for the same property you will pay 3% on the amount between 0 and £125,000 (£3750), 5% on the amount between £125,000 and £250,000 (£6250) and 8% on the final £25,000 (£2000) - a total of £12,000.
This could cause an initial spike in house prices as investors rush to buy. However, the long term impacts are not known, it could potentially result in landlords seeking to increase rents to recover the new tax.
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