Property
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, says Carl Bayley in Business Tax Saver. A change to stamp duty land tax could cut the rate on large purchases from 5% to 1%.
Under the new relief, the rate of stamp duty land tax will be based on the average consideration paid for each ‘dwelling’ with an overall minimum rate of 1%. “The rate is not automatic, but can be claimed by the purchaser.”
Take the example of Pippa, who wants to buy a new house for £550,000. If she buys now, stamp duty land tax will be payable at 4% and will amount to £22,000. If, however, she waits for the day of royal assent and arranges to buy two £70,000 flats from the same developer at the same time, the total cost rises to £690,000, but the average consideration is now just £230,000, meaning that Pippa can claim a reduction in her Stamp Duty Land Tax charge to just £6,900 (1%). “That’s equival
Is the long-term growth trend in UK property still in place?
Despite the fact that UK property market has been a volatile over the last three years, and indeed according to many is on the verge of a further downward spiral, the truth is that in the longer term the UK property market is likely to remain buoyant and in demand. When you take into account the ever-growing population of the UK and the reluctance of many local authorities to build further council houses it seems almost inevitable that demand for existing houses and new properties will grow.
The problem for the UK authorities is that the UK’s is a relatively small island and due to significant underinvestment on new properties in the past there is still a long-term imbalance between supply and demand. Even those who argue that UK property is too expensive for first-time buyers have to admit that the more people who rent in the UK the more demand properties.
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