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Stamp Duty Explained for Property Investors

As a homeowner or investor Landlord, you pay Stamp Duty Land Tax (SDLT) when you buy a property or land over a certain price in England and Northern Ireland. Here's what property investors need to know:

The tax is different if the property or land is in:

In England and Northern Ireland, you pay SDLT when you:

The rate of SDLT depends on many factors. From September 23rd 2022, the SDLTthresholds were amended as a result of the Governments mini budget. Here is a summary of how this may affect you.

How Much Is Stamp Duty?

There are several rate bands for Stamp Duty. The tax is calculated on the part of the property purchase price falling within each band.

You’ll pay Stamp Duty on the purchase of your main property costing more than £250,000 unless you’re a first-time buyer.

For example, if you buy a house for £350,000, the Stamp Duty Land Tax you owe is calculated as follows:

  • 0% on the first £250,000 = £0

  • 5% on the portion from £250,001 and £350,000 = £5,000

Total SDLT = £5,000

Stamp Duty Rates

The current stamp duty rates and thresholds are:

Property or lease premium or transfer value

SDLT rate

Up to £250,000

Zero

The next £675,000 (the portion from £250,001 to £925,000)

5%

The next £575,000 (the portion from £925,001 to £1.5million)

10%

The remaining amount (the portion above £1.5million)

12%

Stamp Duty on Second Homes

If you’re buying an additional property, such as a second home, or a property to let you’ll have to pay an extra 3% in Stamp Duty on top of the standard rates. This increased rate applies to properties bought for £40,000 or more. It doesn’t apply to caravans, mobile homes, or houseboats.

Minimum property purchase price

Maximum property purchase price

Stamp Duty rate (only applies to the part of the property price falling within each band)

£0

£250,000

3%

£250,001

£925,000

8%

£925,001

£1.5 million

13%

Over £1.5 million

-

15%

First time buyers

If you’re a first-time buyer in England or Northern Ireland, you will pay no Stamp Duty on properties worth up to £425,000.

For properties costing up to £625,000, you will pay no Stamp Duty on the first £425,000. You’ll then pay Stamp Duty at the relevant rate of 5% on the remaining amount, up to £200,000.

If the property you’re buying is worth over £625,000, you will need to pay the standard rates of Stamp Duty like all other buyers and won’t qualify for first-time buyer’s relief.

A person is classed as a first-time buyer if they’re purchasing their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK or abroad. Watch out if you have been gifted a property. You may never have actually purchased a property but this will still exclude you from the first time buyer’s relief.

Repayment of Higher Rates of Stamp Duty

If you buy a new main residence but there’s a delay in selling your previous main residence, you might have to pay the higher rates of Stamp Duty as you’ll now own two properties. You may be able to apply for a refund of the higher SDLT you paid if you sell your previous main home within three years of buying the new home.

You can request a refund for the amount above the normal Stamp Duty rates if:

  • you sell your previous main residence within three years, and

  • you claim the refund within 12 months of the sale of your previous main residence, or within 12 months of the filing date of your SDLT tax return, whichever comes later.

If you need any advice on SDLT and the tax implications of buying your next property, Orange Genie Accountancy can help.

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