Interview: What Investors Need to Know about The Stamp Duty Changes
Recent changes in stamp duty, land tax, mean a 3% tax on all second homes costing over £40,000, a 3% tax to pay on top of your purchase price. It is aimed directly at landlords and property investors but not everyone is equal. Here we look at exactly how it applies and at who it affects.
Changes In Stamp Duty And Land Tax
Amy: I want to ask you, Kristen, about stamp duty, land tax - yet more tax, brought in to make us pay more when we're investing in property.
What is your understanding of the changes?
Kristen: So, as you say, it's another way of raising revenue, effectively.
It was brought in, I think, to try to stem a little bit of the flow of property that was being bought by investors, rather than individuals for homes. You can argue the pros and cons of that till you're blue in the face, really.
Now you have to pay an extra 3 percent on every band of property.
So, at the moment, if you buy a single residential property, under a hundred and twenty-five thousand, you wouldn't pay any stamp duty land tax. And then, obviously, it scales up. The more expensive the property the more that you will pay.
What has been brought in for second or subsequent properties, is a 3 percent increase on all of those bands.
This means, even if you are buying a property under that hundred and twenty-five thousand, you still have to pay the 3 percent stamp duty land tax.
The only way you don't pay is if a property costs less than forty thousand pounds. And good luck buying one of those.
But, for those people who are willing to renovate in a big way, that might work.
Amy: If there is anything left in the UK for forty thousand pounds, that is.
Kristen: Certainly, I don't think you'd find a property at that price in Manchester and you'd struggle around where I live.
It's a 3 percent tax, basically, on top of your purchase price. It's Slightly different for those who are buying residential property and intend to sell one on fairly quickly after that. This is a tax focussed on landlords and property investors.
Where In The UK Does This Apply?
Amy: I know with some of the changes in tax and stamp duty there are differences, depending on where you are in the UK. And, I know you wanted to point this out, just in case anyone is watching and are in Scotland or somewhere else.
Kristen: Yes, absolutely. So, basically, anyone in Scotland can ignore everything I've just said. The process of buying a house is very different north of the border.
And, we don't even call it stamp duty in Scotland. There is a tax to pay on on property north of the border but the extra 3 percent, and the bandings that we fall into here, is for England, Wales and Northern Ireland.