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New stamp duty rules come into force this week - here's what it means for home buyers


06-30-2021

 

 

The housing market has been one of the worst hit sectors during the Covid-19 pandemic

 

 

 

 

 

 

 


New stamp duty rules come into force this week - here's what it means for home buyers

The measures first introduced by chanceller Rishi Sunak last July were implemented to kickstart the housing market following the first lockdown

The housing market has been one of the worst hit sectors during the Covid-19 pandemic (Image: Getty)
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The stamp duty holiday introduced by chancellor Rishi Sunak last July is due to finish this week.

In an effort to restart the housing market at the end of the first lockdown, the tax break meant that anyone who purchases a property that completes by June 30, 2021 won't be taxed on the first 500,000.


The government's plans to extend the tax break for three months were announced by Mr Sunak back in March 2021, providing extra time for homebuyers to complete their sales.

The plans for ending the stamp duty holiday won't be abruptly halted on July 1 (Thursday) as they aim to provide a 'smooth transition back to normal', the MEN reports.

The nil rate band will move to 250,000 - double its standard level - until the end of September, and the usual level of 125,000 will return on October 1.

But what does this mean for people buying home?


The government says that if you purchased a residential property between July 2020 to June 30 2021, you only start to pay Stamp Duty Land Tax (SDLT) on the amount that you paid for the property above 500,000.

These rates applied whether you are buying your first home or have owned property before.

If you purchase a residential property between July 1 2021 to September 30 2021, you only start to pay SDLT on the amount that you pay for the property above 250,000.

For example, if you bought a house for 600,000, you would pay nothing on the first 250,000 and then 5 per cent on the remaining 350,000.

From July 1 2021, the special rules and rates for first time buyers apply, including first time buyers purchasing property through a shared ownership scheme.

The rule changes will include a smooth period of transition set to last well into autumn 2021


The rule changes will include a smooth period of transition set to last well into autumn 2021 (Image: Getty)


How much stamp duty do you need to pay?
This is the breakdown of the new stamp duty rates, from July 1 to September 30 2021:

Up to 250,000 - no stamp duty
250,001 to 925,000 - 5pc

925,001 to 1.5 million - 10pc

Above 1.5 million - 12pc

Stamp duty rates return to the standard rate from October 1, 2021:

Up to 125,000 - no stamp duty
From 125,001 to 250,000 2pc
250,001 to 925,000 5pc
925,001 to 1.5m 10pc
Above 1.5m 12pc


What about first time buyers?


First time buyers were already exempt from paying stamp duty for the first 300,000 of the purchase price. So most home buyers will be unaffected unless they buy a property over 500,000.

What about second homes or buy to let properties?


People buying second homes, or buy to let properties still have to pay the three per cent extra duty for second homes on the full purchase price.

This applies until September 30.

 

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