Taxing Time for Home Buyers
NewsBuying a house is a major investment and it is one of the biggest purchases we tend to make in life, however often, particularly as a first time buyer, we look only at the price ticket and don’t consider the many things we need to budget for when making that purchase. One of the major outlays is Stamp Duty Land Tax (SDLT), the tax payable on the amount of the purchase price.
This tax has risen substantially over the past ten years and there have also been various changes to it, most recently for first time buyers in the March Budget. In this article I want to summarise the current position to help those thinking of buying a property.
Purchase prices of £125,000 or below are exempt from SDLT. Over that, SDLT is payable on the full purchase price at 1% i.e. a house price of £126,000 leads to £1,260 being payable.
In areas qualifying as “deprived”, prices up to and including £150,000 are exempt. Qualifying areas are based on Council wards which qualified as deprived in 1991 and these are not always immediately obvious e.g. some of the new city centre apartments in Belfast can be exempt. One side of a road may be exempt, whilst the other is not. The estate agent or solicitor should be able to provide some guidance on whether the house you are interested in qualifies or not.
First time buyers, as from March’s Budget, were also announced to now be exempt (up to 25 March 2012) for purchase prices up to £250,000. This exemption only applies where all the people whose names will appear as owners on the title deeds have never before owned a property (or a share of a property) anywhere in the world. The property also has to be intended to be used as their only or main residence.
Prices over £250,000 lead to SDLT being payable at 3% on the whole of the price e.g. on a price of £252,000, you would pay £7,560, while prices over £500,000 are currently chargeable at 4% on the whole price. In the March Budget the Government announced a new 5% rate for prices over £1 million would be introduced for purchases completing on or after 6 April 2011.
Stamp Duty is payable within 30 days of the completion of your purchase after which the government charges interest and penalties. However most Mortgage lenders insist that the solicitor collects it from you prior to completion of your purchase.
With the current pressure on Government finances, the rates of SDLT are unlikely to be reduced any time soon and it therefore has to be factored into the overall cost of your purchase.
For more information contact Craig Russell in our Conveyancing Department on 02890 323843; email: Craig.Russell@harrisonsni.com
Craig Russell