Stamp Duty Land Tax - First Time Buyers Relief coming to an end
In virtually all cases, when you buy a residential property within the UK, providing the purchase price of the property is over £125,000, you must pay Stamp Duty Land Tax (SDLT).
At present the SDLT rate is 1 per cent for residential purchases where the consideration is more than £125,000 and up to £250,000. However, in 2010 the Government, in an attempt to boost the slow property market and help people take their first step onto the property ladder, announced that first time buyers would not have to pay SDLT if the purchase price was less than £250,000.
To qualify as a first time buyer, you must intend to occupy the property as your main residence. This excludes purchases by corporate bodies, partnerships or trustees, with limited exceptions. You must not, either alone or with others, have previously acquired a major interest in land which includes residential property, or an equivalent interest in land situated anywhere in the world. If you are buying with someone who has previously owned property then, even if you have not owned property, the relief is not available.
If you wish to take advantage of this relief you must do so soon, as the relief only applies to properties purchased before 25th March 2012 and with property transactions generally taking 6 – 8 weeks to complete there is not much time to purchase your first house without having to pay SDLT.
If you are a first time buyer but fail to take advantage of this relief within time you will have to pay the going SDLT rates, which are currently:
Purchase price below £125,000 - 0%
Over £125,000 - £250,000 - 1%
Over £250,000 - £500,000 - 3%
Over £500,000 - £1million - 4%
Over £1million - 5%
There is one further relief available if you are not a first time buyer, or miss the deadline to claim the relief. If the purchase price is £150,000 or below and the property is situated in a disadvantaged area, no SDLT will be payable. To see if the property you wish to purchase is in a disadvantaged area please use the HRMC’s post code checker at http://www.hmrc.gov.uk/so/dar/dar-search.htm
If you wish to know more about the relief or want to ensure your purchase is completed before the relief expires please contact one of our team of experienced residential conveyancers:-