The last of our blogs in this series is upon us! Let’s take a look at the changes in the area of property tax, starting with a little gem that was announced in December 2015’s Autumn Statement….
From 1 April 2016, there will be a 3% higher rate of Stamp Duty Land Tax (SDLT) on the purchase of additional residential property (i.e. the rates charged will be 3% above the usual rates). This will apply to second homes as well as buy-to-let properties, but will also affect those who are moving home where there is a time difference between buying their new house and selling the old one – the higher rate SDLT will be payable on the purchase of the new house, but will be refunded if the old one is sold within 18 months.
Tax planning tip: If you are looking to buy a second home or buy-to-let property, complete the transaction before 1 April 2016 to avoid the additional tax.
From 6 April 2016, Wear and Tear Allowance (which was only available to landlords of furnished properties) will be scrapped and replaced with a new relief which allows all residential landlords to deduct the actual cost of replacing furnishings. The key word here is “replace” – no relief is available for the initial purchase.
Tax planning tip: If your rental property needs any of the furnishings replacing, delay the expenditure until 6 April 2016 or later – that way you will get the tax relief.
You’ve probably heard about the new restrictions being brought in for mortgage interest relief on buy-to-let residential properties – this doesn’t come in until April 2017, so we will blog about this specifically at a later date. For a bit more detail on it now, check out our Spring 2016 News Focus at http://www.torrwaterfield.co.uk/news/newsletters/spring-2016.
Katie Kettle, Technical Manager