Understanding real estate can be tricky, especially when looking at the world of buy-to-rent investments. But if you’re interested in Burnley, a lovely place with a great mix of history and potential, you’re in luck. As a seasoned Burnley real estate pro, I can help explain how the stamp duty affects your buy-to-let investments in Burnley. With this guide, you’ll understand the system of the stamp duty tax, especially how it affects landlords, and learn about the details of buy-to-let properties. Let’s sort through this complex topic together and let me help you make smart investment decisions in the Burnley property market.
Firstly, we’ll start with a brief explanation. Stamp Duty Land Tax (SDLT) is a tax you pay when buying properties in England and Northern Ireland. For residential properties, the tax rates range from 0% to 15% based on the property value. As an investor looking at buy-to-let properties in Burnley, you’ll need to consider this in your budget planning.
From April 2016, new changes to the SDLT added a 3% extra tax on buy-to-let and second homes. This means, for buy-to-let properties, investors pay the regular SDLT rates plus the 3% extra. For example, for a property valued between £125,001 and £250,000, the normal SDLT rate is 2% but for buy-to-let, it increases to 5% including the 3% extra.
However, there are some exceptions to the extra tax. If you replace your main home, the extra tax doesn’t apply. If you buy another property before selling your original home, you have 36 months to sell your old home so you can ask for a refund.
Buy-to-let investors should also know that as of April 2020, a new tax relief was introduced for the purchase of properties to rent to non-UK residents. The relief is limited and depends on how much time the non-UK resident stays in the UK. This could sometimes benefit Burnley’s landlords who rent to students and temporary workers.
In the 2021 Budget, the no-tax SDLT threshold was raised to £500,000 until 30th June 2021. This move aimed to encourage the property market during the pandemic. It still applies to buy-to-let investments, but the 3% extra tax still applies.
In Burnley, where the average property price is much less than the national average, investing in more than one property within this range could lower your total SDLT bill. Despite the stamp duty, Burnley, with its growing economy and increasing rents, can still be a profitable place for buy-to-let investments.
Wrap Up: With changes to the stamp duty, it might seem hard for buy-to-let investors. But knowing the tax bands, exceptions, and reliefs can make it easier to invest in buy-to-let properties in Burnley. Additionally, Burnley with its good rental yields and lower property prices can offer opportunities for smart investors, even considering the extra stamp duty. In the end, staying informed and flexible will help you navigate and possibly benefit from the tax implications. With a strategic approach, you can make the Burnley property market benefit you.