Buy to let stamp duty surcharge and other related news

[d000hg]

How are they actually going to define BTL purchase and holiday homes.

Sounds easy, but I can think of a few tricks to get round it.

In fact, MPs should know all about this - given how many of them flipped their primary and secondary residences to avoid CGT.

If you want a mortgage when you buy the place you probably can't easily play tricks like this. For cash, maybe but it would possibly be fraud, or the hassle you might have to go through - moving there for a few months(?) wouldn't be worth it.

And of course if the majority don't play tricks, it's worked even if a minority to find a loophole.

[jamesbrown]

How are they actually going to define BTL purchase and holiday homes.

Sounds easy, but I can think of a few tricks to get round it.

In fact, MPs should know all about this - given how many of them flipped their primary and secondary residences to avoid CGT.

HMT has already conceded that it won't apply to unmarried couples who each have a property in their own name (i.e. second home scenario, not BTL), so there will be workarounds of sorts. However, I can't see this being especially difficult to legislate or police (they have the land registry database, for example; not sure about BTL, but there's the DPS database, and they were increasing the fines for non-registration earlier this year ). All taxes create problems of avoidance and evasion; they will address them as usual.

[Zero Liability]

Or, "Friends of the Conservative Party", as they are also known.....

Nice one.

I think Oik showed a good awareness of who his real friends are today. It's amazing what you can do with inputs like "growth projections". If the economy's back in the tulipter in a few years, we'll see how rosy those turn out to be.

[jpdw]

Sounds like its about as well thought through as the contractor/IR35 stuff.

What's the "problem" he's trying to "fix" with this? (other than a general need for tax money)

If it's to stop BTL from pushing up purchase prices for would-be homeowners, then exempting established landlords is like giving someone a quarter size plug for a full size plughole.

...would that I had enough spare cash to worry about BTL....

[d000hg]

Or, "Friends of the Conservative Party", as they are also known.....

Or, legitimate businesses.

We should form a syndicate and pool our BTLs.

Out of interest, are there any similar exemptions for the dividend taxes? Funds and so on based on dividend-focused stocks would be damaged, the thought occurs to me.

[scooterscot]

How are they actually going to define BTL purchase and holiday homes..

Probably based on your occupancy, or lack thereof. Even if you're renting your main residence.

Good to know this BTL stamp duty does not apply in Scotland. So I can switch my BTL's back home without worry.

[Andy2]

I want to buy a BTL property.Do i have to do it before April to avoid these monstrous charges ?

[Martin@AS Financial]

Taken from the This is Money Website:


"There are two things to note about the new buy-to-let and stamp duty charge.

Firstly, it has the potential to seriously distort the property market, as landlords and second homeowners rush to beat the April deadline and then go quiet.

Secondly, property investors still have a trick left up their sleeves.

When it comes to selling up, they can offset purchase costs against any eventual capital gains tax – and that includes stamp duty.

So, while they will get whacked with a big bill now, if a buy-to-letter eventually sells at a tasty profit, they can claim stamp duty back later on CGT.

The Treasury confirmed to me last night that this still remains the case. The question is, will it one day face the axe?"

[ChimpMaster]

Taken from the This is Money Website:


"There are two things to note about the new buy-to-let and stamp duty charge.

Firstly, it has the potential to seriously distort the property market, as landlords and second homeowners rush to beat the April deadline and then go quiet.

Secondly, property investors still have a trick left up their sleeves.

When it comes to selling up, they can offset purchase costs against any eventual capital gains tax – and that includes stamp duty.

So, while they will get whacked with a big bill now, if a buy-to-letter eventually sells at a tasty profit, they can claim stamp duty back later on CGT.

The Treasury confirmed to me last night that this still remains the case. The question is, will it one day face the axe?"

A number of people have mentioned the offset of SDLT against CGT when the time comes to sell. Yes you can offset purchase/transaction costs against CGT calculations but this is hardly worth celebrating.

Consider the example of a property purchased at £275k.

At current SDLT rates, you pay SDLT of 3750 on the purchase at 275k.
At 2016/17 SDLT rates, you pay SDLT of 10800 on the purchase at 275k.

Assuming you're paying CGT at 28% of net profit, then the 'saving' in CGT is 0.28 * (10800-3750), i.e. £1974.

So you would have paid £7050 extra stamp duty but only recovered £1974 when you eventually sell... which could be 20 years later!

BTL is not dead for investors, but the game is up for the new wannabe types who go into NMD deals, 'recycling your cash' and other get-rich-schemes, which frankly is a good thing.

[BrilloPad]

BTL is not dead for investors, but the game is up for the new wannabe types who go into NMD deals, 'recycling your cash' and other get-rich-schemes, which frankly is a good thing.

Without newbies to join the great Ponzi scheme the whole stack of cards will come tumbling down.

I expect extra BTL taxes soon. Retrospectively applied.