Stamp duty changes and how they could affect you

08/12/2014

Stamp duty changes, December 2014I’m really pleased to hear that the government has changed how stamp duty is calculated. In the past it’s been very difficult for homeowners who are selling properties that are worth slightly over one of the thresholds, as the financial consequences to the buyer were too high.

For instance, for a property that in an open market is worth £252,000, prior to the recent changes it was unlikely to sell for this price, but was likely to be sold at £250,000. This is because once the purchase price went over £250,000 stamp duty rose from 1% to 3% on the whole amount, which makes a massive difference to your moving costs. Using the same scenario but with the new rules, a buyer would now pay 2% on the first £250,000, and then 5% on the £2,000 over the threshold.

Thresholds are now set at:

0% up to £125,000
2% to £250,000
5% to £925,000
10% to £1.5million
12 on £1.5 million +

It’s reported that the new way of calculating stamp duty will mean that 98% of homebuyers will save money. That said, it’s still a very unpopular tax, and the higher thresholds have failed to increase with inflation. The temptation to avoid higher rates of stamp duty still remains, but I’m sure that properties sold just under a threshold but with a large sum for  fixtures and fittings , will be looked at very carefully.

Having said that 98% of home buyers will save money on their stamp duty, staying in your own home and having a loft conversion or an extension is still likely to be the cheaper option and the easier one. Moving home is one of the most stressful things you can do, and is up there with other gems such as divorce and the death of a loved one. Re modelling your home by converting your garage or extending may cause some disruption to your home life, but not too much if you choose a good builder such as KJ Hill in Bedford and it does mean that you’re in control, and not at the mercy of a buyer who can’t get their mortgage approved, or maybe the people you’re buying from losing the house they wanted.

If you’d like to explore what could be done to make your home suit your current needs and lifestyle, do give us a call on 01234 765050, or e-mail us.

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