Tuesday, July 19, 2011
Hold off on your property splurge
Tax advice of the week: Hold off on your property splurge
If you’re planning multiple purchases of residential property, wait for the Royal Assent to the Finance Act 2011. It could mean big savings in your Stamp Duty bill.
Posted by martingreen @ 09:42 AM (1438 views)
3 thoughts on “Hold off on your property splurge”
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ontheotherhand says:
Was this a mistake? I can understand how a pension fund buying up 20 flats should only pay the stamp duty for each at the appropriate rate rather than lump them together for 5%, but why legislate for an average mechanism? Can one not break a property into the house and the garden and then presto, it’s 1%?
drewster says:
otoh,
I think it still makes sense. Not many people can take advantage of this loophole – you need to be able to afford not just the £550,000 house, but also the two £70,000 flats. Your bank won’t just give you one mortgage to cover them all so you’ll need three mortgages, three valuations, three surveys, etc. Assuming you don’t actually want to keep the flats, you then have to sell them again – paying estate agents’ commission again. There’s also the risk of capital loss if you can’t re-sell at the same price. This only makes sense if you intend to keep the flats; or perhaps gift one to your university-starting offspring.
Personally I think there’s a great business opportunity here. I’m going to build a hundred beach huts in the north of Scotland (approx. value £100 each), and open a dedicated estate agency targeting rich people who want to avoid stamp duty. Want to buy a £2m property? Grab 16 of my huts too, bring your average price down to below £125,000, and you’ve saved yourself £100,000 in SDLT. My fee will be just £50,000 so you’re still quids in.
orcusmaximus says:
@drewster – like it.
This new law is madness.