Could you benefit from the scrapping of stamp duty for first time buyers?
The recent Autumn Budget announced one of the biggest changes to the property market in 2017 with stamp duty scrapped for first time buyers purchasing a home of up to £300,000.
If the property is worth up to £500,000, first time buyers will also pay no stamp duty on the first £300,000 of purchase price.
The changes, which are already in force, were aimed to make the homes more affordable for those looking to get onto the property ladder. 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.
Here, our specialist residential conveyancers take a look at the most recent stamp duty changes.
What is stamp duty land tax?
Stamp duty land tax is usually paid on residential properties costing more than £125,000.
If you buy a property worth more than £125,000, you will 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
So, prior to the recent changes, if you were to buy a home for £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.
Why was stamp duty scrapped for first time buyers?
The aim of changing stamp duty regulations for first time buyers is to make housing more affordable for those not yet on the property ladder.
By scrapping stamp duty, it is hoped that first time buyers will need to save less money for upfront costs, making raising a deposit more attainable.
Who counts as a first time buyer?
A first time buyer is defined as anyone who has not previously been a purchaser in relation to a land transaction and who intends to occupy the property as their only or main residence.
What if you are buying your home with someone else?
If you are jointly buying a property, as long as you are both first time buyers you will still qualify for the reduced stamp duty rates.
However, if you are first time buyer jointly purchasing a home with a non-first time buyer, you will have to pay the full stamp duty rates.
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