They will have to shell out just that little bit more. High net worth investors looking to acquire homes valued at £1 million (Dh5.92 billion) or over will now have to pay the top rate of 5 per cent stamp duty land tax (SDLT) against 4 per cent earlier.
While those buyers set upon acquiring high-end properties will not be dissuaded by a few hundred thousand pounds extra as stamp duty land tax, there is still an option available to them that would not weigh heavily on their pockets.
"To encourage investment into the private rental sector, the government did announce that it would introduce a new Stamp Duty Land Tax (SDLT) relief on residential portfolio purchases," said Ned Al Imad, partner at the London-based Mishcon de Reya Solicitors. "Where this relief applies, the rate would be payable on the mean price of each individual dwellings, which can lead to a substantial SDLT saving."
Stamp duty relief is already in place for those looking to make first-time property purchases slightly lower down on the value chain. According to a spokesperson at Glasgow headquartered Taylor Carmichael Financial Services (TCFS), first-time buyers can secure a two-year temporary stamp duty relief on purchases up to £250,000 until March 24, 2012. If the deal is transacted in joint names, then both parties must be first time buyers to qualify for this relief.
Stamp duty is paid on the whole value of a property. As a case in point, if a property costs £251,000, the buyer would have to pay £7,530 and not just on the amount over the threshold as one can do with income tax. "This means if your property costs £250,000 you will pay £2,500, if it costs £250,001 you pay £7500.03," the official at TCFS added. "The sudden leap in tax bills occurs at each of the thresholds and can therefore sometimes have an effect on property purchase prices at each level. "For example, we would very rarely see a property sell at £251,000 or £501,000 due to the increase in the stamp duty payable."
However, there were concerns that the new stamp duty land tax thresholds- and other changes including the relief only applies to British citizens and not to real estate investments entered into by an overseas investor. This is incorrect as it applies to anybody and everybody buying property in the UK. "The UK has a beneficial tax regime for non-residents investing in UK property; capital gains tax will not normally apply to a non-resident who disposes of property in the UK which is held as an investment asset," said Al Imad.
From / Gulf News