BUYING a property is an expensive business – and that’s without taking into account all the additional costs that come with it.
Stamp duty is one of the extra upfront payments that buyers may have to shell out.
You may not need to pay the tax and the limits vary depending on the value of the property.
We’ve put together an explainer to help you understand what tax is, who pays it and how much you’ll need to pay.
Rushi Sunak promised to abolish stamp duty for first-time home buyers in an election manifesto.
But here’s everything you need to know for now.
Who pays stamp duty now?
It is the property buyers who pay stamp duty, not the seller.
Typically, this is done through a lawyer on your behalf during the purchasing process.
As a home buyer, you have 14 days from the date you purchase the property to submit your Stamp Duty return to HMRC.
You may be charged fines and interest if you do not do so within this period.
If you are purchasing a property that exceeds the property limits listed above, you will need to pay stamp duty.
How much will I pay in stamp duty?
The amount of SDLT you must pay depends on the price of the home you are buying and the type of property.
If you buy a property for less than £250,000, there will be no stamp duty to pay.
If you are a first-time buyer, no stamp duty will be due if the property is worth £425,000 or less.
You’ll also receive a discount if the purchase price is £625,000 or less and pay just 5% SDLT on the £425,001 to £625,000 installment.
Those who are not first-time buyers will pay different rates depending on the value of their new home:
- If up to £250,000 – no stamp duty is paid
- For the next £675,000 (the £250,001 to £925,000 installment) – stamp duty is charged at 5%
- For the next £575,000 (the £925,001 to £1.5 million installment) – stamp duty is charged at 10%
- For the remaining amount (the portion over £1.5 million) – stamp duty is charged at 12%
For example, if you are buying a house worth £300,000, you will pay stamp duty at a rate of 5% on £50,000 – £2,500.
If you want to quickly calculate how much stamp duty you will pay on a property, you can use an online calculator.
Two useful ones are found at www.moneyhelper.org.uk and www.stampdutycalculator.org.uk.
What is stamp duty?
STAMP property tax (SDLT) is a fixed payment that anyone purchasing property or land above a certain price must pay.
You pay tax when:
- Buy a freehold property
- Buy a new or existing lease
- Buying a property through a shared ownership scheme
- The land or property is transferred to you in exchange for payment, for example you take out a mortgage or buy a share in a house
The rate you pay depends on the price and type of property and certain limits:
The current limits are:
- £250,000 for residential properties
- £425,000 for first-time buyers purchasing a residential property worth £625,000 or less
- £150,000 for non-residential land and property
The SDLT rate you’ll have to pay is different depending on whether it’s residential, a second home or rental, or whether you’re a first-time buyer.
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This story originally appeared on The-sun.com read the full story
