If you`re looking to buy a new home for the first time since before 2003, then this is likely to be your first encounter with Stamp Duty Land Tax, which is sometimes referred to as SDLT, but more often than not is just called Stamp Duty.
Stamp Duty is a tax that anyone looking to purchase a residential property or piece of land worth more than £125,000 in England, Wales or Northern Ireland must pay to HM Revenue and Customs.
The main recent change to stamp duty, correct as at 2017, is that you now only pay on the amount of property value that falls within a band.
If the property or land you`re buying is priced at less than £125,000, you won`t need to pay any Stamp Duty, but the next 125,000 on the cost of a home will be taxed at two per cent, with a tax of five per cent applying where the value falls between 250,000 and 925,000.
Buying a property or piece of land worth between £925,000 and 1.5 million? A ten per cent Stamp Duty tax will apply on the amount of value within this range. Above that you are rising to a tax of 12 per cent for all purchases.
If you`re a first-time buyer, you might have previously heard that you`re exempt from paying Stamp Duty. This was once the case, but it is no longer, with the same rate of Stamp Duty applying to first-time buyers as everyone else, but at least the banding helps lower value properties.
However, if you`re only slightly inside a band that sees your Stamp Duty cost rise considerably, you could negotiate with your estate agent / the vendor to reduce this.
People who are looking for a second home have signficantly different Stamp Duty rules to comply with. In this situation, firstly Stamp Duty Land Tax starts at just 40,000 of value rather than £125,000 and there`s also an extra three per cent to pay on top of the price for each band that applies to other land and property buyers.
If you`re buying part of your home off someone else, such as might happen in a divorce situation, no Stamp Duty will apply, while you also won`t have to pay the tax if the property deeds are simply being transferred. Also if you buy a second home to move into and keep your current property, you can claim back your stamp duty if you sell the original property within 3 years.
You will usually pay Stamp Duty through your solicitor. After completing the transaction to purchase your new land or property, you`ll have 30 days to pay Stamp Duty.
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