01 June 2016
Welcome to our latest How to Buy blog. This month we’re going to get to grips with Stamp Duty, as it can often be the forgotten cost associated with buying a new home.
By law, you have to pay Stamp Duty on every house purchase over £125,000 but the amount you need to pay changes depending on the price of the house you’re buying. Essentially it is a tax that is paid in order to register the change in land ownership with the Land Registry.
In 2014, Stamp Duty was reformed by the Government, meaning most people now pay less Stamp Duty than they would have had to before the changes. Stamp Duty is now progressive with the rate increases applied between Stamp Duty thresholds, rather than on the whole purchase amount. Here’s a breakdown of the costs:
Property purchase price Stamp Duty rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
For example if you purchase a house for £195,950 you will need to pay a Stamp Duty fee of £1,419. This works out to be 0% on the first £125,000 and then 2% on the remaining £70,950.
For help on how to calculate your Stamp Duty take a look at this handy online calculator.
The above information only applies to Stamp Duty when you are purchasing a home that you’re going to live in yourself and you don’t own a second property. If you are buying a second home or purchasing a buy to let property, you’ll usually have to pay 3% on top of the normal rates.
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