Stamp Duty Land Tax
What is it?
It is a government “tax” paid by a buyer when a property or an interest in a property in bought by them.
It also covers certain leases.
On a domestic sale of residential property it is currently paid @1% of the price paid if the price is more than £125,000.
On a business property sale it is curretly charged @1% of the price paid if the price is more than £150,000.
New First Time Buyer Exemption
As announced in the March 2010 Budget Statement until 25th March 2012 there will be no Stamp Duty land Tax paid on purchases up to £250,000.00 provided the purchase is by First Time Buyers. Clearly this exemption may be withdrawn on a chnage of government following the forthcoming election.
Does SDLT just relate to purchases?
No, if you buy out the interest of a fellow part owner of the Property (unless an exemption applies) you may be required to pay the tax, if the money paid to them plus one half of the mortgage on the property that you are taking over when added together are more than £175,000. As from 1st January the Stamp Duty Land Tax will change and all transactions completed on or after that date will attract SDLT at 1% on the consideration paid of over £125,000
Fred and Ginger own the house together in equal shares.
We are ignoring the costs of the transaction
We are assuming that no exemption applies to make SDLT on payable
The house is worth £400,000
There is a mortgage of £200,000
Fred pays Ginger £100,000 i.e. her interest in the house less the mortgage and he takes over the Mortgage i.e. another £100,000
Fred for SDLT purposes
pays £ 200,000 so he must pay SDLT at 1% of £2000
How much will it be?
This depends on the rules that apply at the time that you buy the property.
- If you buy a property for £125,000 or less you do not pay Stamp Duty land Tax. this is a temporary extension of the previous limit of £125,000 please click the following link to the relevant Government site for further information
- If you buy a property for more than £125,000 up to £250,000 it is paid on a rate of 1% on the price that you pay for the property as set out in the legal documentation, this ignores builder incentives and the sum that you receive on the sale of any property that you sell to the builder at the same time as you buy the property. Unless the First Time Buyer Exemption applies ( see above)
- If you buy a property for £251,000 to £500,000 it is paid at the rate of 3% on the price of the property
- If you buy a property for £501,000 or more you pay at 4%
When is it paid?
We cannot buy the property for you unless we have the Stamp Duty Land Tax paid to us and cleared by our bank before the date that you pay for the property ” the Completion Date”
It is technically due within 30 days of the completion date
What if I just do not pay it?
You will not be able to register your purchase at the Land Registry, you will not be able to sell it or mortgage it.
You will have breached your mortgage conditions and your property is likely to be repossessed
What if I pay late?
You will be forced to pay financial penalties and interest on the Stamp Duty Land Tax
We will include within our estimate of costs at the beginning of your transaction the cost to you of the Stamp Duty land Tax