Things to know about Stamp Duty
If you’re ready to start looking for a new home, taking stock of the potential costs that will need to be factored into your budget is a must. One such cost is Stamp Duty. To give you a head start, we’ve drilled down into the key information you need to know about Stamp Duty before embarking on the process.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a land and building tax that’s due when a property is purchased in England or Northern Ireland. You’ll pay SDLT if you purchase:
- a freehold property
- a new or existing leasehold
- a property through a shared ownership scheme
If you exchange property or land for payment, you’ll also be required to pay SDLT.
The tax itself is calculated against the valued price of the property, with certain house prices pertaining to certain bands of Stamp Duty.
What happens if I already own residential property?
If you’re about to purchase your second property and don’t intend to sell your current home, you’ll pay a higher Stamp Duty rate on the upcoming sale than you did on your first property. Typically, the amount you have to pay will be 3% on top of the standard Stamp Duty rates. This is true for second properties up to £500,000, however for higher value properties you’ll pay upwards of 8%.
When selling your current home, there might be a crossover between you getting your new property and selling your old one. If this is the case, you may need to pay the higher rate of Stamp Duty on your new property, however you’ll likely be eligible for a refund once your previous property is sold.
When and how do I pay Stamp Duty?
You must pay SDLT owed in full within 14 days of completion. If you’re unsure what to pay, this helpful calculator will work out the correct amount for you. Solicitors have vast knowledge in the matter and usually will prompt payment when the time comes, but if they don’t, remember that you will be the liable party as the owner of the property. For any Stamp Duty relief or reductions, contact your solicitor who will be able to advise on the specifics according to your circumstances.
The process of paying the SDLT itself is completed through an HMRC tax return. There are plenty of guides online outlining the process, but if you’re unsure, your solicitor should be able to advise with the correct information.
How does Stamp Duty affect you?
Stamp Duty is an additional cost that has to be factored into the overall purchasing price. Understanding the amount you’ll have to pay once you’ve set your heart on a property is crucial to getting a handle on your outgoings during the purchasing process.
If you are considering moving to a beautiful property that you own, in a retirement village, then take a look at Mayfield Watford. Our modern retirement properties are situated in the heart of West Watford. With an in-house health club and healthcare support, you can enjoy your retirement to the fullest.
At Mayfield Villages, including our Watford retirement village currently under construction, we will pay up to £15,000* in Stamp Duty when you move in in 2022. Just reserve a brand new property before the end of December 2021 to redeem the offer.