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Stamp duty thresholds for first time buyers

10th February 2020

Buying a property incurs different costs. Alongside putting down a deposit, you may also have to shell out for valuations, surveys, legal fees, and a mortgage advisor. Another consideration is Stamp Duty Land Tax. If you’re a first-time buyer though, it might not be as much as you think – or anything at all. Here’s what you need to know about Stamp Duty if you’re looking to take your first step onto the property ladder. 

 

Eligibility for first-time buyers’ stamp duty 

The government has various rules, regulations, and schemes in place that are aimed at helping people purchase their first home. As well as the Help-to-Buy scheme, for example, which is designed to make it easier for first-time buyers to save for a deposit, the Stamp Duty obligations for new property owners are lenient. 

And the rules around them are fairly straightforward. Firstly, you’re eligible if: 

  • you, and anyone you’re buying with, are first time buyers. 
  • you complete the purchase on or after 22 November 2017 

 

Liability 

So, how much do you pay? The Stamp Duty rate for first time buyers is currently 5% any portion of the property’s price between £300,000 and £500,000. If the price of your property is less than £300,000, you therefore pay no stamp duty tax. If it’s more than £500,000, on the other hand, you’ll have to use the standard thresholds, used by those that have bought a property before. 

 

Let’s take a look at an example. 

If you’re a first-time buyer and your new home costs £395,000 then the amount of stamp duty tax liable will be 5% of £95,000 – £4,750 (i.e £395,000 – £300,000 = £95,000). 

For those who have purchased a property before, the stamp duty tax liable on the same home would be higher. The liability would be £9,750  – over double that of the first-time buyer. This is because there are different rates for existing property owners or first-time buyers of properties over £500,000.  

 

If numbers aren’t your strong point however, don’t worry – the government has a useful online tool you can use to work out how much the stamp duty liability will be. 

 

If you’re looking to buy your first property but are wary of the various pitfalls, then get in contact with IMC Financial Services. Our expert advisors will be able to guide you through the most confusing aspects of purchasing your property – from building your deposit to finding the best mortgage – and will make sure you’re not out of pocket once you step through the front door for the first time. 

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