The UK property market is renowned for being relatively stable. Apart from high profile financial crashes, bricks and mortar is seen as a sound investment. If you are a seasoned renter, but you are keen to take the plunge and find yourself on the first rung of the property ladder, you will be eager to put down roots.
What is Stamp Duty?
Across England and Northern Ireland, when you purchase a residential property, or a piece of land, you are liable to pay Stamp Duty, costing more than £125,000 (or more than £40,000 for second home).
Stamp Duty for First-Time Buyers
As a first time buyer in Northern Ireland, you won’t have to worry about paying stamp duty if the property that you are looking to purchase costs no more than £300,000. This means that you could save up to £5000. If you fancy something a little more pricey, you will need to dig deeper into your pockets and pay some stamp duty.
For example, if you found your perfect pad for £400,000, you will still have the first time buyers’ stamp duty relief on the first £300,000. However, you will need to pay stamp duty on the remaining £100,000. This would result in you needing to find an extra £5000 towards stamp duty which equals 5 percent of the £100,000 that you won’t get relief on.
Stamp Duty on Second Homes
Buyers of new residential properties, such as second homes and buy-to-let properties, will have to pay an additional 3 percent of Stamp Duty in addition to the current band rates.
The higher rate refers to property bought for £ 40,000 or more. However, it does not refer to mobile homes, caravans or houseboats. When you buy a new main residence but there is a pause in selling the previous main residence, you will have to pay the higher Stamp Duty rates because you will now have two properties in your hands.
Nevertheless, you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill if you sell or give away your former principal home within 3 years of buying your new home.
You can request a refund for the amount above the normal Stamp Duty rates if:
- Within three years you sell your previous principal residence and;
- You receive reimbursement within three months of the sale of your former principal residence or within 12 months of the filing date of your SDLT tax return, depending on the later date.
Stamp duty is complicated at the best of times. To make things easier, consider venturing to a first time buyer stamp duty land tax calculator. Here, you can input the property purchase price alongside your credentials and details, and you can work out how much stamp duty you would be liable for. Tools like this can be invaluable to help you get on the property ladder.