Save 5% on Stamp Duty? Here’s How to Avoid the Higher Rates!

#StampDutySavings, #UKPropertyInvestment, #PropertyTaxTips, #TaxSavingStrategies, #CommercialProperty, #PropertyConversion

Did you know? The UK’s higher rate of Stamp Duty Land Tax (SDLT) for residential properties can reach up to 15% in some cases. But with the right strategies, you can legally avoid paying this hefty charge. For example, by purchasing a commercial property, converting it, or buying through a company structure, you can save thousands!

In today’s video, we’re diving into four proven methods that could help you avoid the 5% higher rate of stamp duty when buying residential property. These strategies are ideal for property investors looking to maximize their returns and reduce upfront costs. Here's how you can do it:

Buy Non-Residential Property: Instead of buying residential property, consider investing in non-residential property (like offices, shops, or industrial spaces). The stamp duty rate for non-residential properties is typically 1% up to £150,000, and 2% above that, making it a cheaper alternative.

Convert Commercial to Residential: If you purchase a commercial property and convert it into residential use, you pay non-residential rates. With this option, you can save significantly on stamp duty, even if your end goal is to create a residential space.

Buy Shares in a Company: Another option is to buy shares in a limited company that owns the residential property. This method only incurs a 0.5% stamp duty on the value of the shares, rather than the higher residential rates of stamp duty. A savvy investor can purchase a company for far less tax liability.

Buy an Uninhabitable Property: If the property you’re buying is deemed uninhabitable, you may qualify for non-residential stamp duty rates. The key is that the property must be unfit for residential use, allowing you to bypass the residential tax rates.

Remember, tax laws change, so always consult with a professional to ensure these strategies are appropriate for your situation.

Sources:

HMRC Stamp Duty Land Tax (SDLT) guidelines
UK Government’s official website for tax and legal advice
The Income Tax Act 2007, Section 28 and Section 7 for relevant references

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