As of 1 April 2016, a stamp duty hike of 3 per cent has come into effect. This is applicable for any London property valued at more than £40,000 pounds. The only additional exemptions are houseboats and caravans. Many landlords are concerned that they may feel the financial pinch with this increased tax. Let us look at why this duty was enacted as well as how its impacts can be limited.
The Intention of the Stamp Duty
Landlords who are looking to purchase a new property or to sell an older home will all be required to pay this fee (regardless of how many units are bought or sold simultaneously). The government observes that this tax will help pump approximately £60 million pounds into communities where the "impact of second homes is acute" Still, both landlords and potential renters are concerned. How can the impact of this tax be reduced?
Capital Gains Allowances and Other Concepts
Every landlord should first be aware that this tax can be claimed against any capital gains on the property in the future. It is therefore likely that the stamp duty will eventually pay for itself. Also, many observe that this tax will help to accelerate the current housing supply within London. More new homes equates to a stronger market. Landlords may still have additional questions in regards to their individual obligations. It is always wise to visit the official governmental website to learn further details.