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Helping buyers save on Stamp Duty Land Tax

Cotswold agency, Butler Sherborn, says that agents can help their buyers to save higher rates of SDLT.

The Negotiator

Mickleton Hills Farm imageAll agents will be aware that paying Stamp Duty is an inevitable consequence of buying or leasing a property, and rates have risen recently, both when buying a main home, or purchasing a second or subsequent residential property.

Sam Butler imageHowever, Sam Butler (left) of Butler Sherborn the Cotswold property specialists, says they are finding ways to avoid higher tax hits. “In two particular situations it is possible – and completely legal – to save having to spend quite so much,” he says.

Buy a project

Buying a project home where the stamp duty is payable on a property in need of improvement, will inevitably be less than the purchase price and tax on the same house once it has been refurbished, especially if it moves the completed property into a higher tax band.

“Not only do you save on the stamp duty, but you also derive the benefit and flexibility of doing the work and paying for it over a period of time that suits you, as well as the opportunity of creating a home that’s designed to your taste and style that better matches the way you want to live.

“We also think this situation might help to generate a growing market for project properties, and those that have the potential for further development. First time buyers might also be attracted to the financial gains – and tax savings! – of becoming DIYers. It also increases the argument for buyers to regard their new home as a long term investment, rather than as a short term ‘fast-buck’ financial opportunity,” says Sam.

Buy a mixed use property

A mixed use property is one that combines both a residential element and a commercial use, offering the purchaser the financial advantage of a much lower rate of stamp duty at 4 per cent compared with 10 per cent which is payable on a proportion of a property’s purchase price between £925,001 and £1.5 million.

Mickleton Farm barn imageExamples of additional commercial uses include agriculture – such as grazing paddocks, holiday cottages, stables and small industrial or commercial office space.

“So if you are thinking of moving to the country, a mixed use property provides the win-win opportunity of generating an income and greatly reducing the tax burden. Find somewhere that’s possibly bigger than you had in mind, and it could come with a host of other financial benefits,” suggests Sam Butler.

Buy a project – example: Grange Barn, South Newington, Oxfordshire – guide price £750,000

This property (pictured) is an opportunity to create a contemporary home in over five acres. The existing agricultural barn has planning consent to be converted into a stylish single home comprising open plan kitchen, dining and sitting room with a central staircase, drawing room, master bedroom with en suite bathroom, three further double bedrooms, family bathroom, utility room, cloakroom and a study/fifth bedroom. The five acres will include gardens, ample parking, double garage and large paddock.

June 16, 2016

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