The States of Jersey recently approved the 2015 Budget which contains some important changes in relation to stamp duty and Land Transaction Tax (LTT) (the equivalent tax for "share transfer" property transactions). There will be winners and losers as a result of the changes, which take effect from 1 January 2015 and are being introduced against the backdrop of the current general review of Jersey property taxation.
Reductions for Lower Value Mortgages
Those who will benefit the most will be persons borrowing to finance the purchase of a residential property for £400,000 or less. Instead of the standard stamp duty or LTT of 0.5% of the amount secured, they will pay nothing on the first £300,000 secured on the property and 0.25% on the balance up to £400,000.
First-time Buyers
First-time buyers currently enjoy concessionary stamp duty/LTT provided the value of the property does not exceed £450,000. This threshold is to be reduced to £400,000 but there is to be a sliding scale for the calculation of stamp duty/LTT where the value of the property being purchased is more than £400,000 but does not exceed £450,000.
Increases for Higher Value Residential Properties
The biggest losers will be purchasers of residential properties costing more than £1,000,000, with the introduction of new percentage rates including a top rate of 7% for any amount over £3,000,000. The following tables show the existing rates and the new rates:
Commercial and Mixed Properties
The increased rates were originally going to apply to commercial properties as well. However, following receipt of representations regarding the potential impact on the local commercial property market, the Treasury Minister brought an amendment prior to the States debate for the purpose of restricting the new rates to residential properties. There will, though, be grey areas. The legislation uses the phrase "land on which a dwelling is, or is to be, constructed", which would on the face of it include mixed residential and commercial properties. It appears that it will be necessary, where mixed properties are involved, to agree the stamp duty treatment with the Registrar of Deeds on a case by case basis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
