‘Stamp duty’ is a term that is usually used to refer to the tax that people need to pay on the transference of property. It is always paid by the buyer and the transaction is usually facilitated by legal professionals, such as conveyancing solicitors in Portsmouth.
A conveyancing solicitors in Portsmouth, like Andrew & Andrew, can advise their clients on the current rates of stamp duty so that they can budget accordingly. The rates of stamp duty vary depending on the buyer’s circumstances and property prices.
Changes to stamp duty
Changing the rates or rules around stamp duty is one way that the government has of affecting the housing market. For example, they have recently changed the rules surrounding first-time buyers to help more people to get on the property ladder. They have also applied a steeper charge to those buying a second home so that people who can afford to do so do not squeeze those with less money out of the housing market. In 2008, when the housing market was highly inflated and it was difficult for first-time buyers, the qualifying rate for stamp duty was raised to £175,000 to encourage people to buy.
The rules around stamp duty are different for first-time buyers. Currently, they can purchase a property up to the value of £300,000 without incurring any stamp duty. If the property is worth between £300,000 and £500,000 then stamp duty is calculated as a percentage of anything above £300,000. A first-time buyer is classed as someone who has never owned property regardless of whether they do currently.
People who purchase a second property for themselves or to let are liable for stamp duty if it is worth more than £40,000. In practice, this means that most property transactions involving second homes involve payment of stamp duty. The amount that they need to pay goes up with the value of the property goes. In each bracket, it is 3% higher than the tax rate for people purchasing their first property or moving from one dwelling to another. A conveyancing solicitors in Portsmouth can help buyers to work out their stamp duty liability before they go ahead with their purchase.