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26 July 2023
The new Land, Deeds and Probate Registries Fees and Duties Order 2023 [Land Registry Fees] and what it means for your property transaction. Background
With the new Land, Deeds and Probate Registries Fees and Duties Order 2023 coming into operation on the 1 May 2023 here are some of the main factors you need to know and how they could affect your conveyance.
- The new Order defines three categories of duty payers; Owner Occupiers, Non-Owner Occupiers and Non-Residents.
- An Owner Occupier is an individual who wishes to purchase a property which has a total value of less than £1,000,000 and is able to confirm (by way of a declaration) that the property being purchased will be that person's only residential property worldwide and that it will be occupied for residential use exclusively by that person.
- A person is classified as an Isle of Man Resident if they are present on the Island 183 days out of 364 days before the transaction is completed or they declare their intention to become a resident within 183 days beginning on the date the transaction is completed.
- To qualify for the Owner Occupier rate of duty you must be both an Owner Occupier (as set out above) and an Isle of Man Resident.
- For Owner Occupiers there will be increase in the value of a property which is exempt from the 1% duty, with the first £230,000 of the value of a property being exempt from any duty.
- Owner Occupier rates will be charged at a rate of 1% of the value of the property being purchased from and including £230,000 up to and including £500,000. They will be charged at 2% of the value of the property being purchased exceeding £500,000 up to and including £1,000,000.
- Non-Owner Occupier (you are a non-owner occupier if the value of the property you are purchasing exceeds £1,000,000 even if this will be your only residential property worldwide and you are Isle of Man Resident) duty has changed to a rate of 2%, for properties up to and including £3,000,000. This rate then increases to 2.5%, on the value of the property exceeding £3,000,000.
- Non-Resident duty starts at a rate of 4% for properties up to and including £3,000,000. This rate then increases to 4.5%, on the value of the property exceeding £3,000,000.
The following are examples of people/entities who would not qualify for the Owner Occupier Rate:
- Companies, Foundations, Partnerships and Charities.
- Where the purchase is property with a value over £1,000,000.
- A person or people with more than one property worldwide, e.g. second homeowners and people buying to rent to others.
- A person who is not resident on the Island for 183 days before and after the transaction is completed.
Rates for Owner Occupiers
Example 1:
First time homeowners wishing to purchase a £350,000 property, they are resident on the Isle of Man living on the Island 183 days before the transaction date is completed. The breakdown of their fees would be:
- They would get £230,000 free from duty.
- They would be charged for the difference between £230,000 and £350,000, which is £120,000 at a rate of 1%. They would pay £1,200 in duties.
Example 2:
Existing homeowner(s) on the Island wishing to sell their current home which is their only property and purchase a bigger property. The property they are looking to purchase is £750,000. They are resident on the Isle of Man living here over 183 days before the transaction date is completed. The breakdown of fees would be:
- The first £230,000 free from duty.
- They would be charged at 1% for £270,000 that being the difference between £230,000 and £500,000 which would be £2,700.
- They would be charged at 2% for the remaining £250,000 difference between £500,000 and £750,000. Therefore, the homeowners would need to pay £5,000.
- They would in total pay £7,200 in duties.
Rates for Non-Owner Occupiers
A Non-Owner Occupier is someone who does not fulfil all the conditions of an Owner Occupier. However, they must be an Isle of Man Resident as previously defined.
Example 1:
A person wanting to purchase a second home on the Isle of Man, they live on the Island. They are looking to purchase a £350,000 property for an investment. The breakdown of fees would be:
- They would be charged 2% of the value of the property. Therefore, they would need to pay £7,000 in duties.
Example 2:
A person wishing to purchase a home on the Isle of Man and have it as their sole residence, they live on the Island they are present over 183 days out of 364 days before the transaction date and are resident. They wish to purchase a property at the value of £1,200,000. The breakdown of fees would be:
- They would be charged 2% of the value of the property being purchased. Therefore, they would need to pay £24,000.00 in duties.
Example 3:
A person wishing to purchase a second home on the Isle of Man, and they live on the Island they are present over 183 days out of 364 days before the transaction date and are resident. They wish to purchase a property at the value of £3,500,000. The breakdown of fees would be:
- They would be charged 2% of value up to £3,000,000 would have to pay £60,000.
- They would be charged 2.5% of value exceeding £3,000,000, therefore for £500,000 they would be charged £2,500 therefore they would be charged £62,500 in total.
Rates for Non-Residents
A non-resident is defined as a person who is not present on the Isle of Man for at least 183 days of the year during the period before the transaction begins and ends with the transaction date; and does not intend to become a resident.
Example 1:
A couple wishing to purchase a holiday home in the Isle of Man have their main residence in the UK. They are looking to purchase a £350,000 home. The breakdown of fees would be:
- They would be charged 4% of the value of the property. They would be charged £14,000 in duties.
Example 2:
A couple wishing to purchase a second home in the Isle of Man for investment, they have a main residence in the UK. They are looking to purchase a £3,500,000 house. The breakdown of fees would be:
- They would be charged 4% on the first £3,000,000 meaning they would be charged £120,000.
- They would be then charged 4.5% for the amount over £3,000,000 meaning they would be charged £22,250. In total they would be charged £142,250.
Our Property and Conveyancing team can offer specific advice on all matters to do with Conveyancing. If you require any further information, please contact Callin Wild on 01624 623195 [1] Land, Deeds and Probate Registries Fees and Duties Order 2023
