How will Stamp Duty Land Tax affect your buy to let investment?
For those unaware, or perhaps heading towards purchasing their first property, whether residential or commercial, in the UK you are obligated to pay Stamp Duty Land Tax (SDLT) to the government. Now, I know this may sound intrusive and adding yet another cost on to your purchase, however, for a lot of first time buyers this SDLT will not apply to you.
Stamp Duty Land Tax is a tax paid to the UK government if you purchase a property or land over a certain price in England and Northern Ireland. The current thresholds for eligibility are residential properties over £125,000 and commercial properties over £150,000, which means that if you are buying a property for the first time and it is less than these prices, you will not have to pay the Stamp Duty tax.
There are also different rules if you and anyone else you are buying with, are first time buyers. You can get a discount resulting in paying less or no tax if your purchase price is £500,000 or less, you are a first time buyer, or your purchase has been completed after 22 November 2017.
The total value that you would be subject to pay Stamp Duty tax on is usually the price of the property and/or land. This can sometimes include works or services on the property and goods.
If you are purchasing a property that will not be the only property you own, and it is above £40,000 then you may have to pay a higher rate of Stamp Duty tax, which is still a small percentage amount. On properties up to £125,000 you would only have to pay 3% of the total value of the property, which if in the circumstance was £125,000, you would only pay £3,750 SDLT. As the property price increases, so does the percentage tax, culminating in 15% for properties over £1.5 million. Luckily, the properties we at LPC Invest offer to our clients range from £65,000 to £2 million; giving our clients the opportunity to purchase anywhere on the spectrum they wish to.
Long story short, if you are worried about the costs of purchasing a property in the UK, you shouldn't be. The SDLT is an inconsequential amount of money in relation to the purchase prices of the property and don't forget, if you are a first time buyer you will most likely not pay a penny!
To calculate how much Stamp Duty tax you may have to pay for your property, contact our experts today and see how they can help you. We are experts in property investment and will offer you unbiased, objective advice on the status of your investment.