State pensioners told they can legally avoid Stamp Duty with little known loophole | Personal Finance | Finance
State pensioners are being told they can use a little-known loophole to legally avoid Stamp Duty.
From April 2025, Stamp Duty taxes on buying homes will increase thanks to a lowered threshold, meaning the tax is payable on any property worth £125,000 or more instead of £250,000.
But there is a way that older people can legally avoid the Stamp Duty entirely by changing the kind of property they buy.
Many pensioners will look to buy a home for their old age. Perhaps they are downsizing in retirement and want to free up some equity from their family home to spend, moving into a smaller house and then having the leftover money to spend in old age.
Or perhaps they have a windfall from a private pension and want to finally own a house instead of renting.
Whatever the reason, pensioners buying a property will have to pay even more Stamp Duty from April when the thresholds change, with some facing bills of up to £58,000 to pay in Stamp Duty.
Unless they buy a residential park home.
These are often custom designed retirement homes or retirement villages. They will sometimes only be buyable by people over a certain age – 50, 55 or state pension age – and are geared towards older people.
These homes, according to property experts Regency Living, are not subject to Stamp Duty.
Sales & Marketing Director at Regency Living, Tim Simmons said: “Homebuyers across the nation will be understandably disappointed to see that no extension to current stamp duty relief thresholds was granted in this week’s Autumn Statement.
“The good news is that, for first-time buyers, purchasing a home at £300,000 or less will still see them pay no stamp duty, however, it’s existing homebuyers who are likely to be hit with the largest increase in costs when it comes to purchasing.
“For many, this increase will be £2,500 and will see the average existing homebuyer across England paying £5,500 in stamp duty. However, this climbs north of £10,000 in 55 local authorities and as high as £58,000 in the most expensive areas of the market.
“Whilst having a foot on the ladder does put them at an advantage to some extent, stamp duty remains a substantial financial barrier that delays homebuyers at all rungs of the ladder.
“It’s hardly surprising that one of the biggest draws of the residential park home sector is the fact that park home buyers don’t pay any stamp duty on their purchase. So not only do the majority benefit from releasing equity in their bricks and mortar home, but they also face lower costs when purchasing, putting them in a great position financially.”
