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Stamp Duty Land Tax – What’s Changed?




Is this the news that home buyers have been waiting for?

Yesterday we saw an announcement from Chancellor Rishi Sunak, which revealed a range of new packages to stimulate the economy; a temporary stamp duty overhaul being one of these new changes.

Firstly, what is Stamp Duty?


Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England and Northern Ireland.


If you’re buying a new residential property to use as your main residence, you won’t have to pay stamp duty on properties costing up to £500,000 up until 31 March 2021. This will apply whether you’re a first time-buyer or whether you have previously owned a property.


Properties costing more than £500,000 will pay the current Stamp Duty rate based on the value of the property over £500,000.


This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.


How much is Stamp Duty?

Example

For example, if you buy a house for £600,000, the Stamp Duty Land Tax you owe is calculated as follows:

  • 0% on the first £500,000 = £0

  • 5% on the final £100,000 = £5000

Total SDLT = £5000

This is a saving of £15,000 based on the Stamp Duty rates that were in place before 8th July 2020.


Stamp Duty on second homes

If you’re buying an additional property, such as a second home or certain buy-to-let properties, you’ll still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band up until 31 March 2021.

This increased rate applies to properties bought for £40,000 or more.


Example of a Buy-to-Let purchase:

For example, if you buy a buy-to-let property for £150,000, the Stamp Duty Land Tax you owe is calculated as follows:

  • 0% on the first £500,000 = £0

  • 3% additional property stamp duty charge = £4,500

Total SDLT = £4500


You must have completed your property purchase by 31 March 2021 to qualify for the new revised rates on Stamp Duty. Any purchases completed before the chancellor’s announcement on 8 July 2020 will continue to pay Stamp Duty rates valid at that time.












Olivia Thomas

Director at RF&O Properties

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I hope you enjoy reading our blog and find it both informative and useful. These articles are designed for people who have an interest in the residential property market in and around the Alfreton and Ripley areas. 

 

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