The dust may have settled on this year’s Budget but the effects on families and home owners could be felt for a lifetime after major changes were announced to Stamp Duty and the Inheritance Tax threshold.
We all know that the rise and fall of house prices can reflect the ups and downs of the economy and the Budget produced both property winners and losers in a bid to inject new life into the market.
First time buyers were the biggest winners after the Chancellor introduced a new two-year Stamp Duty holiday for first-time house purchases up to £250,000.
Right away, this move brought nine out of ten first time buyers under the Stamp Duty threshold altogether, and it is expected that more young buyers will now be able to put the thousands saved on Stamp Duty towards their deposits.
While many of the homes in Wigan and the surrounding areas which appeal to first time buyers fall way below this threshold, there are many parts of the country where this is not the case, and this new tax relief could help to reignite the property market. Much will depend on whether mortgage lenders are willing to provide enough funding to enable first time buyers to enter the property market.
Those wishing to purchase million pound homes were not so lucky and they will now face a five per cent Stamp Duty rate from April 2011, which will pay for the relief being given to first timers. This equates to paying at least £10,000 more on tax on a million-pound move.
If all the relief measures work, there will be a sting in the tail once property prices begin to inflate at a quicker pace, after the Inheritance Tax (IHT) threshold was frozen for four years.
Forecasters expected the IHT rate to rise to £350,000, but the Chancellor elected to set it at £325,000 until 2015, meaning more families with modest estates will be forced into this tax bracket over the next four years. But there are measures to make sure that you maximise the use of the ‘allowance’ available on death. An Inheritance Tax efficient Will is a good starting point and, in most people's cases, could be all that is needed.
By residential conveyancing solicitor,