Q&A: BUY TO LET STAMP DUTY 2016 CHANGES
Who is affected?
Those buying a buy-to-let property or a second home will face higher stamp duty tax bills.
What are the changes?
Under new rules, 3 per cent will be added to every single stamp duty band for buy-to-let and second homes - including the previously tax-free element.
For those snapping up a £275,000 home, the current rate of stamp duty means a £3,750 stamp duty bill.
This is worked out by:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT = £3,750
But adding the 3 per cent surcharge will see the price of the tax rocket for landlords.
3% on the first £125,000 = £3,750
5% on the next £125,000 = £6,250
8% on the final £25,000 = £2,000
Total SDLT = £12,000
When are the changes coming into effect?
From 1 April 2016.
Can landlords offset these costs?
Yes. They can claim stamp duty back later against capital gains tax bill.
If they sell up their property later at a profit, they can offset purchase costs against any eventual CGT, which includes stamp duty.