Stamp Duty is on Vacation
2020 has been a difficult year for many people, having been subjected to the effects of COVID 19. There was however, some exciting news for buyers in July 2020, when Chancellor Rishi Sunak announced advantageous temporary stamp duty changes for residential purchasers. This of course is also good news for sellers, as buyers will be keen to buy and make this saving.
From 8 July 2020 until 31 March 2021 inclusive, if you are buying a home in England or Northern Ireland you will pay a reduced rate of Stamp Duty Land Tax (SDLT).
Until 31 March 2021 there will now be no Stamp Duty payable, if the amount you pay for your main home does not exceed £500,000. This relates to residential property transactions. If the purchase price is more than £500,000, SDLT will be charged on that part of the price that is more than £500,00.
Some more good news -If you are buying an additional residential property, or a property on a buy-to-let basis, you will also benefit from paying less SDLT than previously. Additional homes surcharge of 3% will still continue to apply.
Something to remember, is that buyers have to pay a second home SDLT surcharge when they purchase an additional property. However, if you then sell or gift away your previous main home within three years of buying your new main home, you can apply for a refund of the second home surcharge on your SDLT bill, the Inland Revenue can provide more details about this, and the conditions you must meet.
If you are considering carry out a transfer of equity on a property, bear in mind that a Transfer of equity can also attract SDLT. A Transfer of Equity is where there is a change in the co-ownership status of a property. Stamp duty is payable on the ‘chargeable consideration’ of a property transaction but this amount includes not just money passing from one party to the other. An existing mortgage is chargeable consideration too, and will be need to be taken into account when calculating potential stamp duty liability. Transfers of equity on main residential homes may also benefit from the current stamp duty reduction.
Reports have shown so far that a substantial number of buyers have already benefited from the Tax reduction.
The last stamp duty holiday was back in 2008, when Chancellor Alistair Darling suspended stamp duty for a year on properties worth up to £175,000. The current stamp duty holiday will not be quite as long, and will end on 31 March 2021.
As a well established Law Firm, with a wealth of expertise in property, we understand Stamp Duty liabilities. We can take care of all your property transaction needs. Please contact Daveena Seepaul, Head of Residential Property at Edwards Duthie Shamash.