The property industry is one which comes with a huge number of terms, many of which can be initially difficult to understand. Here at Garness Jones, we strive to make sure our tenants, landlords or potential tenants and landlords have the information they need to deal with all matters relating to their property, whether they’re renting it out or renting it themselves. In our new ‘EXPLAINED’ series, we’re seeking to do just that.
What is Stamp Duty?
Stamp Duty Land Tax is a lump-sum tax that you pay when purchasing a property or piece of land over a set amount in England, Wales and Northern Ireland.
For residential home buyers, the tax applies if the property is worth over £125,000, however for buy-to-let buyers, the threshold is much lower at £40,000.
Do any other rules apply to landlords?
Since April 2016, anyone purchasing a ‘second home’ such as landlords and those buying a holiday home, have also been subject to a 3% surcharge on stamp duty payments. This means they pay an extra 3 percentage points on top of the usual rate you would pay if you were purchasing your main residential home.
What will the Stamp Duty cost me?
The rate of the tax will depend on the value of the purchase you make when buying the property, with different bands varying the amount you’ll need to pay.
When do I need to pay Stamp Duty?
Stamp Duty must be paid within 30 days of completing a property purchase. Usually, you transfer the money to a conveyancer who will make the payment for you on the day you complete.
Do I have to pay it?
If you’re purchasing a residential property that’s under £125,000, then you will not be required to pay Stamp Duty. You also won’t have to pay if purchasing a freehold ‘second home’ (or buy-to-let property) if it’s under £40,000. It’s worth noting that both individuals and companies are required to pay stamp duty on property transactions - nobody is exempt apart from charities and registered social landlords.