From midnight Wednesday 3rd December, the stamp duty reforms announced by the Chancellor, George Osborne, came into effect. What are the changes and what does this mean for you?
The Changes in Summary
Under the old stamp duty system, you would pay tax at a single rate on the entire property price but now you’ll only pay tax on the portion of property price that falls into the different stamp duty band. For example, under the old rules, someone buying a property for £250,000 would pay stamp duty at 1% or £2,500. If the property was only £1 more than £250,000; the property moves into a different stamp duty band of 3% and the buyer has to pay 3% stamp duty on the entire property price. So for a £260,000 property, that would be a hefty £7,800.
In the new rules, you pay nothing on the first £125,000; pay 2% on the portion between £125,000 and £250,000 and then 3% on the portion above £250,000. So you only pay £3,000 stamp duty in total for the same £260,000 property – that’s a savings of £4,800 compared to the old rules!
That’s an extra £4,800 for refurbishment, furniture, a holiday, Christmas shopping and you’ll still have enough left to hire PROPERTYmajor to help manage your property.
So here are the new rates in summary for different property prices
- Up to £125,000 : 0%
- £125,001 to £250,000 : 2%
- £250,001 to £925,000 : 5%
- £925,001 to £1.5m : 10%
- Above £1.5m : 12%
Under the new rules
- 98% of homeowners in England and Wales would pay less after the changes than they do under the current system
- Only people who buy homes worth more than £937,000 will pay more in tax.
As a result of the changes, we’ve seen renewed interest from our investors and sellers with properties, whose prices were previously capped at stamp duty thresholds also now have a reason to rejoice.
So it’s great news for everyone.
From us at PROPERTYmajor, it’s been an amazing year and a great privilege to have you as our clients. Don’t forget to redeem your gifts and vouchers in our Offer of The Month section. Merry Christmas and a beautiful new year ahead. Let’s do it again in 2015!
PROPERTYmajor provides a friendly, unique residential lettings & property management for landlords looking to invest in South East London and Kent. If you would like to request some of our guides or fancy a no obligation chat, please call us on 01322 518 020 or visit our website www.propertymajor.com