Purchasing a home is undoubtedly one of the biggest investment decisions we make in life. Due to the nature of the investment the thought process tends to be meticulous and extensively planned. From the costs involved, simply down to the features of the home, everything requires attention. When purchasing a home the hidden fees and additional layers of cost is something not many home buyers are aware of until the moment of nearing completion. One of these is Stamp Duty Land Tax and one of the most important considerations when buying a home. But what is it and how does it apply to you?
So, What is Stamp Duty Land Tax?
Stamp Duty Land Tax is a government charged tax applied to a property in the process of purchase, or as part of a transfer of equity. Widely considered as the registration and official completion of the purchasing of your home the amount of tax is variable and dependant on a range of factors .e.g Are you a First Time Buyer? What is the value of the property? Is the property your main or additional residence? These are just some of the factors that contribute towards the amount of Stamp Duty Land Tax you will end up paying.
How much Stamp Duty Land Tax will I pay?
Well if you’re a First Time Buyer, great news! You are not required to pay any Stamp Duty Land Tax on a property under the value of £300,000. Stamp Duty Land Tax is only applied on a property over £300,000 at a standard rate of 5% for First Time Buyers. For example, let’s say the value of your property is £450,000. There is no tax applicable on the first £300,000, however tax will be applied at a rate of 5% to the remaining £150,000 of the property meaning a tax of £7,500 will be charged. The First Time Buyer relief is very encouraging as a First Time Buyer, however it is only applicable on properties with a total value of £500,000 or less. Anything above this value will disqualify you from the First Time Buyers relief and result in standard Stamp Duty Land Tax being charged. For those home buyers that aren’t First Time Buyers, standard rates will be applied.
Still unsure on how Stamp Duty Land Tax applies to you? Why not get in touch with us, our expert brokers are on hand to provide advice and deal with any queries you may have.