Everything you need to know about Stamp Duty
For my first blog I have decided to concentrate on Stamp Duty rules and regulations.
As someone who bought her first house only 6 years ago, and who has moved house twice in that time, I know how confusing understanding and calculating Stamp Duty can be for a first-time buyer, and for those who have not bought a house for a number of years. Looking at what your budget can stretch to for a mortgage is one thing, remembering to add Stamp Duty on top of the purchase price of your dream property is another!
The rules on Stamp Duty can and do change, and hopefully this post, which outlines the most up-to-date information on Stamp Duty, will guide and inform those of you who are thinking about purchasing your first property, and those who are looking to move properties in the near future.
What is stamp duty and how is it calculated?
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties.
You pay the tax when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, for example, when you take on a mortgage or buy a share in a house
First time buyers
There are different rules if you’re buying your first home. You get a discount (relief) that means you pay less or no tax if:
- you complete your purchase on or after 22 November 2017
- the purchase price is £500,000 or less
- you, and anyone else you’re buying with, are first-time buyers
How much do you pay on a residential property purchase?
How much you pay depends on whether the land or property is residential and whether you’re a first-time buyer.
You can use the Wishart Estate Agents Stamp Duty Land Tax calculator to work out how much tax you’ll pay on the residential property you’re buying:
You may be able to reduce the amount of tax you pay by claiming relief, such as if you’re a first-time buyer or purchasing more than one property (‘multiple dwellings’).
How and when to pay
You must send an SDLT return to HMRC and pay the tax within 14 days of completion. Your solicitor will file your return and pay the tax on your behalf on the day of completion, they’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer.