Stamp Duty Land Tax (SDLT) has to be paid on any buy-to-let property you invest in. The amount payable varies at a rate governed by the price you pay for the property. As of new tax laws implemented in April 2016, the current rates of SDLT for investment properties are as follows:
– 3% on the first £125,000 – 5% on the portion between £125,000 and £250,000 – 8% on the portion between £250,000 and £925,000 – 13% on the portion between £925,000 and £1.5 million – 15% on any value beyond £1.5 million
These new rates are charged for anyone purchasing a second property that isn’t their primary residence. This includes holiday lets and also properties bought for children, if the parents’ names are put on the deeds. Stamp duty must be paid within 30 days of purchasing a property.
Can I claim SDLT as a business expense on my tax return?
The short answer is no. The main allowable expenses that can be taken into account for tax deductions are:
– Repair and maintenance costs for the property – Replacing domestic items – Accountancy fees – Insurance bills – General running costs
There are some other expenses that can be claimed as business expenses and deducted from the overall cost of your annual tax bill, but Stamp Duty isn’t one of them. However, there is a benefit to tax that your stamp duty fee does offer you with regards to an investment property.
When you come to sell your investment property further down the line, you can benefit from having a record of what you paid in stamp duty when you bought it. This is because your stamp duty costs qualify for being deducted from your overall Capital Gains Tax bill when you sell the property. This means that, ultimately, stamp duty is, in fact, tax deductible on an investment property, just not when filing your annual tax return.
You can use stampcalculator.co.uk to learn all you need to know about stamp duty and calculate your own costs to help plan your purchase of a home or investment property in the UK. Good planning and budgeting is key to making the right choice, and we are here to help you cover all your bases.