So, what exactly is stamp duty land tax 2020 and how does it work for landlords? Here, you’ll discover everything you need to know about the tax and how it could impact you.
What is Stamp Duty Land Tax 2020?
Stamp Duty Land Tax (SDLT) is a type of tax you pay when you purchase a property over £125,000 for residential properties and £150,000 for non-residential properties. It only applies to landlords in England and Norther Ireland. Those in Scotland and Wales pay a different type of tax.
You have to pay the tax if you purchase a freehold property, a shared ownership property, or when you buy an existing or used leasehold. You’ll also have to pay if you have land transferred to you as a type of payment.
You will also need to pay SDLT if you pay more than £40,000 for a second home. It doesn’t matter whether you are paying through a mortgage or outright either.
How much will you need to pay?
How much stamp duty you’ll need to pay will depend upon several factors. There are different stamp duty bands, and the tax is calculated using the band, alongside the purchase price of the property.
If the property was up to £125,000, you won’t have to pay anything. If it cost from £12,.001 to £250,000, you’ll pay 2% stamp duty. For properties priced £250,001 to £925,000, you’ll pay 5%. Then for properties worth £925,001 to £1.5 million, you’ll pay 10%. Any properties over £1.5 million result in a 12% stamp duty tax.
Those who are buying a second home will face higher stamp duty tax 2020. For each band, you’ll need to pay an extra 3% on top of the existing tax rate if you’ve purchased a second home or a buy to let property.
Understanding stamp duty relief
There is good news for first time buyers in the form of stamp duty relief. This means, if you’re purchasing your first property up to £300,000, you won’t need to pay any stamp duty tax. If you were to buy a property for £500,000, you’ll only pay stamp duty on £250,000 of it.
However, if you are a first-time buyer and you purchase a property over £500,000, you won’t qualify for stamp duty relief.
It can help to seek professional advice when purchasing a new property to ensure you know how much stamp duty tax you need to pay. There are a lot of things you need to consider as a landlord such as landlords insurance from Homelet, deposit schemes and your obligations. However, it’s easy to forget about stamp duty tax liabilities.
If you are considering buying a new property, it’s worth researching everything you can about stamp duty tax. You’ll also want to make sure you’re following up to date advice as the regulations can change with each passing year.