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Tag: Stamp Duty

Stamp Duty on second homes: everything you need to know

Posted on by Sophie Winter

Are you considering purchasing a second home? Recent announcements from Chancellor Rachel Reeves in the Autumn Budget have significant implications for buyers looking to invest in second properties or buy-to-let ventures. With changes to the Stamp Duty rates and tax thresholds set to take effect in 2024 and 2025, it’s crucial for prospective buyers to understand these updates and plan accordingly. Here’s a comprehensive overview of what to expect and how to navigate these changes effectively:

Key Stamp Duty changes for second homes

Starting 31 October 2024, the Stamp Duty surcharge for second homes and buy-to-let properties will increase. While buyers of primary residences will not be affected, those acquiring an additional property will face higher tax obligations. Here’s how it breaks down:

New Surcharge: Effective from 31 October 2024, this surcharge will rise to 5%, resulting in additional costs for second home buyers.

Previous Surcharge: Buyers of second properties currently pay an additional 3% on top of standard Stamp Duty rates.

Important timing considerations

If you plan to buy a property intending to make it your main residence, the timing of both your purchase and sale is crucial. Even if your new property is meant to be your primary home, you will incur the 5% surcharge unless you complete the sale of your existing home before finalizing the purchase of the new one. If your previous home sells within 36 months, you can apply for a refund of the surcharge.

This detail highlights the importance of coordinating sale and purchase timelines closely when transitioning to a new primary residence.

Upcoming changes to Stamp Duty thresholds in Spring 2025

It’s also important to be aware of the impending changes to Stamp Duty thresholds in Spring 2025. The current thresholds, which were adjusted in 2022 to ease the tax burden on homebuyers, will revert to pre-2022 levels as follows:

  • Current Stamp Duty Thresholds (until April 1, 2025):
    • Up to £125,000: 0%
    • £125,001 to £250,000: 0%
    • £250,001 to £925,000: 5%
    • £925,001 to £1.5 million: 10%
    • Above £1.5 million: 12%

  • New Thresholds (effective April 1, 2025):
    • Up to £125,000: 0%
    • £125,001 to £250,000: 2%
    • £250,001 to £925,000: 5%
    • £925,001 to £1.5 million: 10%
    • Above £1.5 million: 12%

The reduction in thresholds means that purchases between £125,001 and £250,000 will now incur a 2% Stamp Duty rate, which is currently zero. This change could increase costs by at least £2,500 for transactions within that range. Prompting buyers to consider moving their timelines up to avoid this additional expense.

Implications for second home buyers

Increased Costs for Investors: The 5% surcharge on second homes starting in October 2024 will directly affect buy-to-let investors and those looking for holiday properties.

Coordinating Sales and Purchases: For those buying a new primary residence, it’s essential to complete the sale of your current home before finalising the new purchase to avoid the surcharge. Remember, the refund option remains available for 36 months if the sale is delayed.

Buying Ahead of the Spring Threshold Reversion: If you’re considering buying a primary or second home in the lower property bands, purchasing before the threshold changes will help you benefit from more favourable Stamp Duty rates.

Budgeting for Stamp Duty: Stamp Duty must be paid within 14 days of completing the property purchase. So it’s vital to have funds available to avoid penalties or interest. Collaborate closely with your solicitor or conveyancer to ensure a smooth transaction and a clear understanding of your tax responsibilities.

With these changes on the horizon, timing will be critical for anyone planning to buy a second home or an investment property. Being informed about the new rates and thresholds can help you make better decisions regarding when to buy and how to manage your finances effectively. Consulting a property expert or financial advisor can also provide valuable insights into navigating these changes and optimising your investment strategy.

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If you’re looking to buy a second home, get in touch with our team today for help on your journey!

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Why choose CR Real Estate: The best estate agent in Gillingham for selling your home

Posted on by Sophie Winter

If you’re considering selling your home in Gillingham, selecting the right estate agent can make all the difference. With a trusted partner, you can navigate the market confidently, secure the best value, and enjoy a seamless selling experience. CR Real Estate, known as the best estate agent in Gillingham, is committed to delivering unparalleled service, expert insights, and a dedication to each of our clients. Here’s why CR Real Estate should be your first choice.

Unmatched local expertise in Gillingham

One of the most important benefits of working with CR Real Estate is our wide knowledge of Gillingham and the surrounding areas. We have been actively involved in the local property market for years. Which has given us insights into each neighbourhood, from Rainham to Twydall, Hempstead to Wigmore. This local expertise allows us to not only price your property accurately. But also connect with the right buyers who are looking for a home like yours in Gillingham.

A tailored marketing strategy for your home

To be the best estate agent in Gillingham, CR Real Estate goes above and beyond to ensure your property stands out in a competitive market. Our marketing strategies are carefully crafted for each property and include high-quality professional photos, engaging property descriptions, and listings on all the major property portals. We utilise social media, email marketing, and even local advertising to make sure your property receives maximum exposure. This multi-channel approach ensures that your property is seen by as many potential buyers as possible, speeding up the sale process and achieving the best price.

A personalised and client-first approach

At CR Real Estate, we understand that every property sale is unique, and every client has different needs. We take the time to understand your goals, answer your questions, and keep you informed throughout the selling process. From the initial valuation to negotiations and the final sale, our team is with you every step of the way. Providing guidance and ensuring you’re comfortable with every decision. This commitment to a personalised approach has earned us a reputation as the best estate agent in Gillingham.

Highly experienced and qualified team

Our team at CR Real Estate is made up of experienced professionals who bring a wealth of industry knowledge. We stay up to date on market trends, legal requirements, and best practices. Ensuring that you receive accurate advice and exceptional service. Our team is trained to handle all aspects of the selling process, including negotiations, viewings, and paperwork, so you can rest assured that your property sale is in capable hands.

Transparent communication and honest valuations

One of the biggest challenges when selling a home is understanding how much it’s worth. At CR Real Estate, we pride ourselves on offering honest, data-backed valuations. We provide a thorough market analysis, explaining every aspect of the valuation so you know exactly what to expect. Moreover, we keep you updated with regular market insights and provide honest feedback after each viewing. This level of transparency not only builds trust. But also ensures that your expectations align with the realities of the current market.

A proven track record of success

As the best estate agent in Gillingham, CR Real Estate has a proven record of helping homeowners achieve outstanding results. Our client testimonials and successful sales speak for themselves. We are dedicated to delivering results that not only meet but exceed expectations. Whether you’re looking for a quick sale or the highest possible price, we have the experience and drive to make it happen.

Choosing CR Real Estate: your trusted partner in Gillingham

Selling a property is one of the biggest financial decisions most people will make, and having a partner who understands the local market, prioritises your needs, and delivers results can make all the difference. At CR Real Estate, we strive to offer the best estate agent experience in Gillingham. We put our clients first, using our local expertise, and providing a personalised, results-driven service.

If you’re ready to sell your home in Gillingham, trust the best estate agent in Gillingham. Book a valuation online today for a free, and let us show you how we can make your property sale stress-free.

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Autumn Budget 2024: What Labour’s new policies mean for homeowners, buyers, and the property market

Posted on by Sophie Winter

Today’s Autumn Budget 2024, delivered by Labour, has introduced several bold changes that will impact the housing market and, more broadly, the property landscape in the UK. With a strong emphasis on addressing housing supply, improving affordability, and enhancing tenants’ rights, this budget brings both challenges and opportunities for homeowners, buyers and investors. Let’s take a closer look at the key announcements from the Autumn Budget 2024 and how they could shape the property market.

Second home Stamp Duty rises from 3% to 5%

Starting tomorrow, buyers purchasing a second home will see a significant change in stamp duty, with an increase from 3% to 5% on the entire property’s value. This adjustment means that anyone buying a second property, such as a holiday home or investment property, will now need to pay an additional 2% on top of the standard stamp duty.

Currently, the second-home stamp duty surcharge is 3%, which is applied to the entire property value in addition to the regular stamp duty rates. But with this change, the surcharge will jump to 5% as of tomorrow.

How the Stamp Duty increase works

For instance, if you’re purchasing an investment property worth £500,000, the stamp duty would now amount to £37,500, calculated as follows:

  • 0% on the first £250,000 = £0 in stamp duty
  • 5% on the portion from £250,000 to £500,000 = £12,500
  • 5% surcharge on the entire property value = £25,000

This brings the total stamp duty for a £500,000 second home to £37,500. By comparison, buying the same property today would incur a total stamp duty bill of £27,500.

Chancellor Rachel Reeves explained that this increase is intended to support more first-time buyers and those looking to move homes by easing some competition from investors in the housing market. Current reliefs for first-time buyers and home movers remain unchanged.

Stamp Duty relief for first-time buyers and home movers continues

The Autumn Budget confirms that first-time buyers will continue to benefit from an elevated stamp duty threshold. This allows first-time buyers to pay no stamp duty on properties priced up to £425,000. For properties valued between £425,000 and £625,000, a 5% stamp duty applies to the portion above £425,000. Properties exceeding £625,000, standard rates apply.

For home movers—those selling one home to purchase another—the stamp duty threshold of £250,000 remains intact. Here’s how the rates break down:

  • 0% on the first £250,000 of a property’s price
  • 5% on the portion between £250,000 and £925,000
  • 10% on the portion from £925,000 to £1.5 million
  • 12% on the portion above £1.5 million

For a clear estimate of your potential stamp duty costs, use our partnered mortgage brokers Stamp Duty Calculator.

Increased Capital Gains Tax rates for second homes

The Chancellor also announced an increase in Capital Gains Tax (CGT) rates. Which impacts profits made from selling assets such as second homes. The CGT rate for lower-rate taxpayers (those earning under £50,270 annually) will rise from 10% to 18%. And for higher-rate taxpayers (earning over £50,270) from 20% to 24%.

For example, if you bought a second home for £500,000 and later sold it for £600,000, the capital gains tax would now be:

  • £18,000 for lower-rate taxpayers (up from £10,000)
  • £24,000 for higher-rate taxpayers (up from £20,000)

Although Rachel Reeves highlighted that this rate remains the lowest among European G7 countries, this increase may discourage property investors. With 12.5% of properties on the market currently former rental homes, the shift could lead to reduced rental supply, intensifying competition for rental properties and potentially driving up rental prices.

Inheritance Tax rules for property held until 2030

The Budget also extended current inheritance tax rules on property through 2030, maintaining the tax-free threshold at £325,000. For direct descendants, this allowance increases to £500,000, and to £1 million for properties passed to a spouse and then inherited by children or grandchildren. However, new rules coming in 2027 will include unused pension funds and death benefits within an estate’s value for inheritance tax.

What now?

The Autumn Budget brings significant changes for property investors and second-home buyers. With impacts likely to be felt across the rental market as well. First-time buyers and home movers can still benefit from current reliefs, but potential investors may approach future transactions with greater caution as these tax changes take effect. For more information, please contact us on 01634 570057.

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