What is stamp duty tax?
When it comes to purchasing a property, there is a lot of expenses you need to consider. Along with paying Agent fees which typically sit at 1% and legal fees, is it likely you will also pay stamp duty or land tax.
What is Stamp Duty?
Stamp Duty is charged to the buyers in England and Northern Ireland when purchasing a residential home or land that costs more than £125,000 or £300,000 for first-time buyers. This tax would apply to both freehold and leasehold properties- whether you’re buying outright or with a mortgage.
How much is Stamp Duty?
Stamp Duty is based on the value of the home. See below how the rate you pay varies depending on the price of the property.
– No Tax up to £125,000
– 2% up to £250,000
– 5% up to £950,000
– 10% up to £1.5m
– 12% over £1.5
To help make sense of the stamp duty % and purchase price, if you bought a house for £350,000 for example, the stamp duty to pay would be 0% for the first £125,000, 2% on the second £125,000 (£2,500) and 5% on the final £100,000 (£5,000)- so in total you’d pay £7,500.
What if I’m a first time buyer?
Stamp Duty has been scrapped for first-time buyers in England on properties up to the value of £300,000 starting from August 2017.
For properties up to £500,000, first-time buyers would have to pay a reduced tax rate of 5% on the remaining £200,000- so in total they would have to pay £2,500.