Zero carbon properties could save you thousands in stamp duty tax

DATE: Jul, 31   COMMENTS: 0   AUTHOR: Allan Azarola

Stamp duty is owed on all purchases of buy to let residential property over £40,000, and with an added 3% rate in place across property price bands subsequent to George Osborne’s amendments in 2016, investors in buy to let properties and second homes are feeling the heat of having to pay more of the already troublesome tax.

Stamp duty taxes on standard, single residential properties remain significantly lower than the upper tier for additional property buyers, and RWinvest have an excellent Stamp Duty Calculator to allow all purchasers to work out the amount of stamp duty due on homes and flats. However, a recent article has disclosed that opting for a more eco-friendly asset could be the answer to reducing your stamp duty tax bill or avoiding it altogether.

But what qualifies as zero-carbon? A zero-carbon property returns the same amount of power to the National Grid as it uses in a year. Specialist microgeneration equipment which produces energy on a small scale is utilised throughout the property to maintain the intricate balance.

In line with the most recent stamp duty regulations, zero-carbon homes and apartments under £500,000 are now exempt from stamp duty, and those over the £500,000 threshold can see the tax reduced by a momentous £15,000. This is a massive drop in comparison to the average rates applicable to properties that don’t achieve full zero-carbon status. To put this in perspective, a non-zero-carbon buy to let property costing £140,000 would usually be liable for £4,500 in stamp duty fees, but investors would pay nothing at all when buying assets that adhere to the zero-carbon grade.

The new tax incentive will encourage more investors to opt for zero-carbon investments in order to avoid paying the extra duty on property. This is excellent news for the environment which desperately needs a cut down on carbon emissions which are slowly destroying the natural world. Property plays a bigger role than you may think in contributing to carbon emissions and greenhouse gases, with energy use in housing responsible for creating 27% of the UK’s total carbon emissions.

A target has been set for 2050 to accomplish an 80% reduction in greenhouse gases with proposals to build 250,000 new zero-carbon homes aiming to help hit the ambitious but so necessary goal. Solar panels, double glazed windows, smart metres, wall insulation and geothermal heating are amongst many other unique features that will be installed into modern properties to help slash carbon output completely. These features which are currently perceived as a novelty in somewhat idealised properties need to become accepted as the ‘norm’.

Zero-carbon homes not only reduce the amount of stamp duty being paid, but also boast extremely positive investment prospects for buyers. There’s a high demand for more properties like this with young people especially keen to tap into the green property trend, and this is reflected in a call for change throughout the sector.

High rental returns can be achieved and bills and running costs are reduced to make the management of properties easier and more attractive. Additionally, zero-carbon properties are designed to be fit for the future and will thus increase in value over time as we move into a generally more environmentally conscious world. With new builds being a more popular option than ever for buy to let investors, why not consider a zero-carbon property for your next investment and reap the benefits of dodging hiked stamp duty taxes?

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