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Posted by eduard on May 5, 2019
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All about stamp duty

Everything to Know About Stamp Duty

Whether you are a seasoned buyer in the United Kingdom or a first-timer, hearing the two words “ Stamp Duty” can be intimidating (especially when you know nothing about it).

If your real estate purchase costs more than £125,000, you are obligated to pay Stamp Duty Land Tax (SDLT). Understanding how Stamp Duty works for first time buyers or the rates required for second or even third homes, guarantees to make the process smoother and gives you peace of mind.


Defining Stamp Duty

Stamp Duty is defined as a tax that applies to freehold and leasehold real estate properties with or without a mortgage. The tax is applicable if the property costs more than £125,000 for residential properties, £150,000 for non-residential land and properties, or  £40,000 for the second home. For first-time home owners, defined as someone who has never owned a freehold or leasehold property, Stamp Duty is exempt up to £300,000. The Stamp Duty must be paid within 30 days of purchase of your new home.

Calculating the exact amount you will be paying can be found through a Stamp Duty Calculator, a helpful tool found on several websites for your convenience.


Stamp Duty Rates

 A first-time buyer in England, meaning that the real estate property is their only residence and have never been home owners or have had leasehold interest, are exempt from Stamp Duty up to £300,000 and will save about £5,000. If the property was to exceed £300,000, then they will pay the rate on the amount remaining. For example, if a property is £800,000, the rates are applicable to only £500,000.

Different bands categorize the rates.  Residential leasehold properties have different rates.



Stamp Duty on your second property purchase


Real estate properties purchased for £40,000 or more will pay the band rate with an additional 3% in Stamp Duty.

Applying for a tax refund is possible if you are able to sell or give away your home within the 3 years of purchase or claim a refund within three months of your previous residence or within 12 months of filing for the return.


Joint Property Ownership

 Being exempt from Stamp Duty when having a joint ownership is only applicable if both or more parties are first-time buyers.

Several points must be kept into consideration:

  • Maximum amount that could be saved on a property is £5,000.
  • Solo mortgage applications are based on the applicant’s income.
  • Legal aspects must be considered if the property was to be sold or given away under joint ownership.

Stamp Duty penalties and interest along with more details can be found on the Gov.UK website.

Further information on real estate and investments in the United Kingdom for residential propertiesairport parkingstudent accommodationcare homes, or hotel apartments can be found at Oxfordproperty

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