Byzan­tine stamp duty rules and their un­in­tended con­se­quences

The Daily Telegraph - Your Money - - YOUR MONEY -

prob­lems. Mr Os­borne in­tro­duced the mea­sure, along with other tax changes, as a way of try­ing to dam­pen en­thu­si­asm for buy-to-let.

Un­der the new rules, any­one who buys an ad­di­tional res­i­den­tial prop­erty, in­clud­ing hol­i­day homes and buy-to-lets, has to pay an ex­tra 3 per­cent­age points in stamp duty.

All prop­erty trans­ac­tions above £125,000 are sub­ject to a stamp duty charge of at least 2pc, and the 3pc charge is on n top of this. This means that pur­chases ur­chases of be­tween £125,000 and £250,000 are now sub­ject to a 5pc charge, and then hen pur­chases up to £925,000 925,000 will in­cur an 8pc charge. harge. Homes worth up too £1.5m are now sub­ject to 13pc stamp duty and those ose over this amount will in­cur a 15pc charge. e.

This means, as in n the ex­am­ple of Miss ss Fer­nan­dez, a pur­chase of a £500,000 home will now in­cur an ad­di­tion­al­ad­di­tiona £15,000 stamp duty pay­ment.paym “Ac­ci­den­tal“Ac­cid land­lords” like Miss Fer­nan­dez or 26-year-old26-year Claire Wil­liams,Wil­lia from west Lon­donLon (left), have beenbe caught out by this.t Miss Wil­liams never meant to be­come a land­lord but got caught out when she bought a house with­out re­al­is­ing it had “ten­ants in situ”. SheS went through withw the trans­ac­tion, only to dis­cover when she bought her main home shortly af­ter­wards that the higher rates would ap­ply.

Cou­ples who come to­gether al­ready own­ing one or two prop­er­ties in their own names face other dif­fi­cul­ties. If they marry, it is as­sumed un­der stamp duty rules that they are both own­ers of prop­erty, even if the tech­ni­cal own­er­ship is in one per­son’s name.

This gives rise to fi­nan­cial in­cen­tives not to marry or even for mar­ried cou­ples to di­vorce. Last year this news­pa­per re­ported the cases of nu­mer­ous mar­ried cou­ples who found them­selves caught out by the sys­tem. Land­lord Sajj Ahmed gave his buy-to-let prop­erty to his wife, which was a com­mon prac­tice ahead of the changes to tax re­lief that were re­cently in­tro­duced. How­ever, as the prop­erty was mort­gaged he was forced to pay stamp duty on the trans­ac­tion, de­spite it oc­cur­ring within a mar­riage. This ended up cost­ing the cou­ple thou­sands of pounds.

As Tele­graph Money has re­ported, the com­plex rules have left con­veyancers and prop­erty lawyers scratch­ing their heads with new cir­cum­stances con­tin­u­ally test­ing the sys­tem.

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