Mixed use stamp duty liability could save you money when purchasing property
At the end of 2015, major changes to the way stamp duty is calculated came into effect. The changes mean that purchasers may be able to reduce their stamp duty liability depending on the use of their property. The new legislation brought with it a new banding system, with properties worth £250,001 to £925,000 paying 5% stamp duty, those worth £925,001 to £1,500,000 paying 10% stamp duty, and those above paying a massive 12%. However, there is a way to pay only 4%...if your property has a mixed use. So what does mixed use mean, and does it apply to you? Mixed use refers to a property that has both residential and non-residential elements, including: commercial property; agricultural land; forests; any other land or land or property, which is not used as a residence; or six or more properties bought in a single transaction. How could this save money? Here’s an example: one of our current properties on the market – Brereton Hall, Brereton, Cheshire. A Magnificent Grade I listed mansion in a lovely rural location with far reaching views, Brereton Hall includes four reception rooms, 12 bedrooms, ten bathrooms, extensive domestic offices, separate offices, gardens and pastureland of around 116 acres. As the property is in the highest stamp duty tax band, potential purchasers could be been liable for 9.7% stamp duty (around £630,500). However, as a proportion of the property’s land is rented out to a local farmer for cattle grazing (mixed use), buyers should pay only 4% in stamp duty (around £260,000) – an impressive saving of £370,500. This is of course subject to acceptance by HMRC. Purchasing property with land that can be rented out not only brings in a regular income, but may also now bring large savings on stamp duty liability, making it an attractive proposition – even for those that may not be interested in owning acres of land. It’s definitely food for thought. This is an illustrated example. Anybody looking to purchase a property would need to take specific legal advice in relation to stamp duty policy.