If you’re thinking of buying a home you need to know exactly what you need to pay along the way – from solicitor fees to stamp duty. But what is stamp duty and how much will you need to pay when you buy a new home?
What is stamp duty?
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England, Wales and Northern Ireland.
The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties.
Unfortunately this means that as house prices continue to rise more first-time buyers often have to pay stamp duty on the purchase of their properties. In 2016 the average annual house price for first-time buyers was £202,765, according to the Office of National Statistics.
How much will I need to pay?
How much you need to pay, depends on the purchase price of the property you are looking to buy. For residential purchases you pay:
- 0% of the house value if the property is worth up to £125,000
- 2% of the house value if the property is worth £125,000 - £250,000
- 5% of the house value if the property is worth £250,000 - £925,000
- 10% of the house value if the property is worth £925,000 - £1,500,000
- 12% of the house value if the property is worth £1,500,000 and upwards
This means that if you buy a home (freehold) worth £150,000 then you will need to pay £500 in SDLT, if you buy a home worth £250,000 then you will need to pay £2,500 in SDLT and if your home is worth £350,000 you will need to pay £7,500 in SDLT etc.
If you are buying a leasehold property then you may need to pay SDLT on the rent too if the rent over the life of the lease is more than £125,000. This will be worked out for you by the solicitors involved in your house purchase, you can also use the Government’s SDLT calculator online at: www.gov.uk.
When do I need to pay the SDLT?
You’ll need to submit a Stamp Duty Land Tax return and pay what you owe within 30 days of completing the purchase of your home – your solicitor will usually arrange this payment and paperwork for you.
You can view our handy infographic on the right.
If you would like to apply for a mortgage, contact our friendly team on 0800 378 669 or contact us online here.
You can also request a copy of our Mortgage Guide, which is packed with useful information on the full mortgage process – here.
Read all the other article in our ‘Mortgage Basics’ series:
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Source - https://www.gov.uk/stamp-duty-land-tax/overview