As expected it was a relatively boring Budget (as a party that is, pre election, climbing back in the polls the last thing you do is rock the boat) yet the big question I was left asking is “what is a first time buyer?”…
The Chancellor announced that the threshold for paying stamp duty would be temporarily doubled from £125,000 to £250,000 to stimulate demand and help first time buyers get on the housing ladder (in other words if you’re a first timer and the house costs under £250,000 you won’t pay the tax).
Yet this left me asking a number of questions?
- What defines a first time buyer?
- What if a first time buyer is buying with a previous property owner? In which case would the allowance only be up to £175,000 – or would it be half and half – or simply not at all? This is likely to be quite a common scenario that one person in a couple has owned previously.
- What if a first time buyer is buying with 10 people who’ve previously bought? This extreme example makes it interesting, would they all get the tax relief, would it be linked to just one person?
We’re going to be working on the answers this afternoon – it’ll be interesting to find out.
The big shame here is the Chancellor didn’t take the opportunity to make this a fairer tax . The way it works at the moment is absurd (see my the UK’s worst tax blog for why).
I do also question that as one reason for doing this is to help those who don’t have big enough deposits, does it really do that – it cuts the cost for buying a property – but it doesn’t have a substantive effect on the deposit needed.
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PS Update Note: 4pm Budget day The answers are all in – in a nutshell you must never have bought or owned (ie even if you inherited) a leasehold or freehold property anywhere worldwide before – and in the case of buying jointly with someone else it only works if BOTH of you are first time buyers.