Will the scrapping of Stamp Duty for most first time buyers affect you?
The government have recently announced that Stamp Duty Land Tax will be abolished for first time buyers who are purchasing a home of up to a value of £300,000.
For properties which cost up to £500,000, no stamp duty will be paid on the first £300,000 of the purchase price.
The changes were implemented immediately on the 22nd November 2017 and it has been suggested that 95% of first time buyers will see their stamp duty cut and 80% will pay no stamp duty at all.
In this article, our Residential Conveyancing specialists take a look at the stamp duty changes.
What is stamp duty?
Stamp duty land tax is the tax paid on the purchase of a residential property costing more than £125,000.
Anyone buying a property over £125,000 will have to pay a percentage of the purchase price as Stamp Duty Land Tax.
The Tax thresholds are:
- 0% on the first £125,000 of the property price
- 2% on the portion between £125,001 and £250,000
- 5% on the portion between £250,001 and £925,000
- 10% on the portion between £925,001 and £1.5 million
- 12% above £1.5 million
For example, prior to the budget announcement last month if you were to buy a home costing £300,000 you would have no stamp duty applied to the first £125,000, 2% on the next £125,000 and 5% on the remaining £50,000. This would bring the total stamp duty cost to £5,000.
So who is a “first time buyer”?
The Government have defined a first time buyer as an individual who has not previously been a purchaser in relation to a land transaction and who intends to occupy the purchased property as their only or main residence.
Why has this been scrapped for first time buyers?
Stamp duty has been scrapped for first time buyers purchasing a home up to a value of £300,000 in an attempt to make housing more affordable.
By reducing the upfront costs a first time buyer will need to save for, it is hoped that more people will be able to make the first step onto the housing ladder.
What if you are in the process of buying a home?
The changes have come into effect immediately which means that if you are already in the process of buying a home, you could benefit from the changes.
The requirement to pay stamp duty kicks in when you complete the purchase of the property. This means that if you have exchanged contracts on your purchase but not yet completed, you will fall under the new stamp duty rules, subject to being a first time buyer.
What if you are buying the property with someone else?
If you are jointly purchasing a home then both buyers will need to be first time buyers. So if you are a first time buyer but you are purchasing a home with a non-first time buyer, you won’t qualify for the reduced stamp duty rates.
Thinking of buying your first home? Get a quick conveyancing quote with Farnworth Rose
If you are thinking of buying your first home, you can get a quick conveyancing quote by calling the expert team at Farnworth Rose on 01282 695 400.
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