Stamp Duty Land Tax, more commonly referred simply as 'Stamp Duty', was introduced in December 2003. Stamp Duty is a tax charged by HM Revenue & Customs upon the transfer of a property. So, tax is normally payable by the purchaser of a property.
Like income tax, it is a percentage based tax, so if you purchase a property for more than £125,000 you will pay 1% of the value as tax. Above a purchase price of £250,000, this increases to 3% of the total and again at £500,000 where the tax increases to 4% of the total value. Not insignificant sums of money!
For many first time buyers, Stamp Duty is another cost eating into the funds that could be used towards a deposit.
In the wake of the problems experienced in the housing market in 2008, the Government announced in the September of that year a temporary suspension of Stamp Duty on purchases up to £175,000. So if you were to purchase a property at £175,000 you would not have to pay £1750 in tax!
This Stamp Duty holiday was further extended in the 2009 budget and is due to end on 31st December 2009.
To take advantage, the property you are purchasing must be purchased for less than £175,000 and you must legally complete on the purchase before 31st December 2009.
Given the levels of deposit required by mortgage lenders, we would urge any first time buyer considering buying in the early part of 2010 to consider bringing their purchase forward to this year in order to avoid this additional cost.
Given the state of the public finances, it is doubtful that this scheme to help first time buyers will be extended.
If you are considering buying a property and what to go through your options as well as calculate the costs of moving, Oak Tree Mortgages are on hand to help. Call us on 0121 733 8833.
