Three weeks to go before stamp duty increases on BTL properties
The government has made it clear that they now want to encourage first time buyers over and above Buy To Let landlords. As a result, we are just a few weeks away from the massive increase in stamp duty on second properties. From April 1st anyone buying a second property will be charged an additional 3% stamp duty. As always these things come with a nice acronym to help you remember how you are being shafted and in this case it is SDLT (Stamp Duty Land Tax).
Stamp Duty Increase on BTL properties
A 3% increase in Stamp Duty has come as a shock to many investors, particularly bearing in mind the other onerous tax changes that are currently being bought in. The tax advantages that BTL investors have got used to are all disappearing. Many readers have told me that all these recent tax changes will mean their profitable property portfolios will become loss making within the next 12 months.
Many investors hoped for a consultation phase before the new stamp duty changes were implemented but that doesn’t look likely now. The recently published consultation paper, although not final, has given us all a lot more detail about how SDLT is likely to be applied.
Essentially the new additional SDLT tax of 3% will be applied whenever a second property is purchased. This applies to ALL second properties even if the property is not rented out. If it is a primary residence and the first property is subsequently sold within 18 months then the additional 3% stamp duty can be reclaimed. This of course does create the opportunity to rent for a short period of time and still reclaim the additional tax although this will have limited appeal to anyone trying to build a BTL portfolio.
In real terms the increase is substantial. A property costing £250,000 would see the stamp duty leap from 1% to 4% meaning an increase from £2,500 to £10,000. A nice £7,500 bonus for the chancellor on that sale alone. Will it affect the property market? Of course it will particular bearing in mind all the other tax changes being bought in on BTL properties at the same time.
Only one primary residence allowed for SDLT
As with all new tax changes everyone is looking for the loop holes and the obvious one is can a married couple, or even partners, have a primary residence each? The answer is no – only one property is allowed. Furnished holiday homes also fall into this category although time share properties are expected to be exempt.
SDLT is designed to remove the BTL unfair tax advantages
The government have made it clear that they see no reason why BTL investors should be able to claim tax perks that ordinary owner occupiers cannot. As a result, the many tax advantages that investors have enjoyed, like claiming tax relief on mortgage interest and claiming 10% tax deduction from rental income profits are all disappearing.
If you have BTL properties it is vital that you understand these changes and discuss with your accountant how they will affect your profits in the future. Some surveys suggest that around 13% of BTL owners plan to sell their rental properties as a result of the recent changes. I suspect that figure may be a lot higher when landlords see the effect that the recently announced tax changes will have on their profits.
Related Posts
Comments are closed.
6 Comments
At £100 to double-you’re not really competing with large scale seasoned professionals.
Once you go down the doubling numbers you begin to compete in effect with institutions and or Goverment policy etc(as that kind of continual doubling becomes an Intrest to the other 7 billion people and stated Goverment)
As a result-after a handful of these ‘doubling’ moves…the ability and time and competing positions from other investors and said governments etc just make the ability a compounded hardness.
Hopefully as we become more sophisticated we can enjoy these posts but realise they are like any other headline….attention seeking!
I’m afraid that none of that is even remotely true, Gerry. Remember, DYWTAM was written by not one, but two, multi-millionaires using these very techniques. I suspect that you’ve been ripped off in the past by the many “get rich quick schemes” that are out there. That’s a real shame. Having done all of the fourteen levels myself, (and I watch others do the same every week), I feel highly qualified to disagree with every single one of your comments. If you’re not rich now then you have to change your thinking if you want to make serious money. Here’s the thing; “If you keep doing what you’ve always done – you’ll keep getting what you’ve always got”. Stop and think about that for a minute. I don’t know if you live in a two million pound house but if you don’t, here you are telling someone who does that this won’t work. Really? The DYWTAM Programme is a genuine no-nonsense guide on how to become a millionaire – and absolutely anyone can do it.
Barry, is it only 10 issues of Double your way to a Million? A friend of mine who is interested wants to know, thanks.
Yes. That’s correct. One a month for ten months.
hi barry i am interested in your horse racing course and your recommendation of using isiris,i understand kevin booth has resigned from isiris do you still recommend we use this company still thank you,and also i notice on your websitethat it is still dated 2017 .
Good question. I have not used the Isiris service recently. I had a brilliant 11 year run but eventually I got closed down by all the bookmakers. I guess that’s a real sign of success but it was fun to do and I actually miss it. I did not know that Kevin had actually retired but I understand that the results this year have been extremely good. Maybe regular readers who still use Isiris can update me on that one and let me know how they are doing.