23rd February 2016
The 3% higher rate stamp duty land tax (SDLT) on second homes and buy-to-lets coming into effect 1 April 2016 could adversely impact parents buying jointly with their children to help them into the housing market.
The Chartered Institute of Taxation (CIOT) commented ahead of the changes that joint buyers who are not replacing their main property will face the 3% charge on the entire price.
CIOT focused on the higher SDLT rates on additional residential properties sold for more than £40,000.
Key points were:
- the increased complexity of the higher rates will fall on landlords who may not have tax expertise
- imposing higher rates on joint purchases that have a clear social value could be inequitable
- the valuation of a lease on property interest worth less than £40,000 may present difficulties.
CIOT have suggested a carve out from the new rates for joint buyers who are parents buying a home for their children.
Brian Slater, chair of the CIOT’s property taxes sub-committee, said:
“Life is complex and there are many situations where parents want to support their adult children in buying a home.
“Taking even a small interest (while owning another property) means that the extra three per cent is payable on the whole of the purchase price. This will substantially increase the SDLT bill, but there are cases - like supported living – where it is absolutely right for parents to have an equity interest.”
Contact us today to find out about the upcoming stamp duty changes.