Increase in Tax for Owners of Second Homes and Buy-to-let Properties
Following changes to the stamp duty land transaction tax (SDLT) from 1 April 2016, higher rates of SDLT will apply to the purchase of additional residential properties (such as second homes and buy-to-let properties). The changes followed a surprise announcement by the Chancellor at the last budget and were passed in the Finance (No. 2) Bill 2015-16.
If at the end of a purchase a buyer owns two or more residential properties, they may be liable for a higher rate of SDLT. One of the key factors in whether extra tax is due is whether they are replacing their main residence. If the buyer has disposed of a previous main residence within 36 months of the day of the transaction, the buyer will be considered to be replacing a main residence and no extra tax will be due.