Changes to Stamp Duty Land Tax on Multiple Purchases 2011
Now that the Finance Act 2011 is in force, multiple purchases of residential property could cut your stamp duty land tax bill from 5% to 1%.
Under the new relief, the rate of SDLT will be based on the average consideration paid for each dwelling with an overall minimum rate of 1%. The rate is not automatic but can be claimed by the purchaser. Let's look at an example to see the benefits.
Jane has £735,000 to spend on residential property and she considers buying one house for herself from a developer.
SDLT @ 4% of £735,000 = £29,400
Jane then sees some flats for sale from the same developer and decides to buy a cheaper house and 2 flats at the same time. Each flat costs £80,000 and the house is £575,000 so the total price is still £735,000
However, the average consideration of the 3 properties is £245,000 (£735,000/3). The SDLT band is now only 1% for all three properties because the average consideration for all three properties (£245,00) remains within the 1% tax band.
SDLT @ 1% of £735,000 = £7350
This represents a tax saving of £22,050
Looking at it another way that equates to a discount of almost 14% off the flats because they were bought as a multiple purchase.
Newnham & Jordan Solicitors are specialist commercial and residential property solicitors who can assist you with all property related matters including sale, purchase, letting, tennancy agreements, disputes, enfranchisements. We also specialise in equestrian property matters, farm and land transactions.
This article is intended for general information purposes only and shall not be deemed to be, or constitute legal advice. Newnham & Jordan Solicitors, in Wimborne Dorset, cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article or any external articles it may refer or link to.