When it comes to buying a house a lot of jargon, complicated form filling and intense meetings are thrown your way, so it can all become a little overwhelming, plus the seemingly never ending extra costs, on top of your house deposit, can cause some frustration.
Stamp duty is just one of the many upfront costs you have to consider. Think of it like paying the road tax on your car, but you only have to do it once when first you buy the property. The amount you pay depends on the value of the property you buy and you only need to pay Stamp Duty if the house you are buying costs £125,000 or more.
Buying a house is an expensive business, but there’s no end of help out there to guide you through the process. You can seek free, impartial advice online when it comes to saving up to buy a house, as well as great tools and calculators for working out how much all your upfront costs will be.
These costs apply to residents of England, Wales and Northern Ireland – so we are all in the same boat! The BBC did, however, report in February this year that the current Tory Government in Wales is looking to scrap Stamp Duty there, in a bid to boost the housing market, although this is yet to be confirmed or carried further.
Stamp Duty is usually payable within 30 days of the ‘effective date’ – this is basically the date when the sale is completed. Your solicitor will more than likely help you arrange for this to be paid and encourage you to pay the bill straight away (if you wait longer than the 30 days you could be faced with a fine, plus interest!)
Stamp Duty works on a band system and the Labour Government last updated this in 2003. Now properties priced at and under £125,000 pay no stamp duty, one percent is paid on properties costing between £125,000 and £250,000, three percent between £250,000 and £500,000 and four percent for properties priced above £500,000 and so on.
Stamp duty can also have a big effect when it comes to selling your house. If you price your property at £126,000 your buyer will have to pay £1,260 in stamp duty, if you put your house on the market for £124,500 the buyer won’t have to pay any. It can make a big difference when it comes to making that sale.
There are times when Stamp Duty can be avoided, these include: when you are transferring a proportion of your home’s value to your spouse or partner if you are separating or divorcing, if the price of the house just creeps into a higher Stamp Duty band so you ask for a slightly lower price and finally you can gift your home (for example, to your children) or leave it in your will, without the recipient having to pay any Stamp Duty.
So whatever your situation, whether you are looking to buy a house for the first time or if you are looking to move home again, Stamp Duty is simply just another tax that we must pay throughout our lives, but once you understand what it involves it shouldn’t cause too much of a headache.
A collaborative post.