TAKING that first step on the property ladder may just have got slightly easier thanks to the announcement of a Government-backed investment scheme.
Chancellor George Osborne’s latest Budget was finally approved by MPs earlier this week, paving the way for the introduction of a new Lifetime ISA.
From April 2017, the accounts will be open for everyone aged between 18 and 40, allowing savers to put aside up to £4,000 per year and qualify for a bonus of 25%.
That means for every £4 saved, investors will now receive a £1 top-up from the Government.
Some or all of the money can be used towards a deposit on a first-time home or alternatively, it can be withdrawn tax-free after the age of 60 to contribute towards retirement costs.
Accounts are held in individual names and not per property, meaning that two people buying together will both separately qualify for the 25% bonus.
While this certainly represents a good deal for anyone wanting to save up for their first property, there are some other conditions to think about before opening a Lifetime ISA next year:
*There is no minimum monthly contribution but the maximum annual amount will be capped at £4,000
*The savings and bonus can be put towards a deposit on a house worth up to £450,000
*Anyone who already has a Help To Buy ISA can either transfer their money into the new ISA account or continue saving into both types. However, account holders will only be able to use the bonus from one to contribute towards a house.
Alongside the new Lifetime ISAs, a 3% stamp duty surcharge will be applied to second homes and buy-to-let properties.
Meanwhile, although the higher rate for Capital Gains Tax has been cut from 28% to 20% and the lower rate from 18% to 10%, landlords will continue to be taxed at the current levels for gains made on residential property.
You can read the Government’s latest fact sheet about Lifetime ISAs here.
Did you know that properties below £125,000 are exempt from stamp duty? Discover some of our homes below the stamp duty threshold by going to our search page or call the Redrose team on 01257 547061.