Stamp Duty, the bane of many a homeowners life, can be hard to figure out. Just when you think you have all of the costs for your home totted up, along comes another, and extremely meaty one too, to throw your plans into disarray! Let us try to help clear the fog with our guide to Stamp Duty.
A common misconception is that Stamp Duty is a tax on your house. It isn't. Instead it is a tax on certain documents that you can't buy a house without using. Since December 2003 in the UK, it has been known as Stamp Duty Land Tax (SDLT) replacing the old Stamp Duty for land transactions, whether or not completion takes place.
Stamp Duty Land Tax adds a considerable expense to what is already an expensive process. Different rates of SDLT apply to different value sales. Houses up to £125,000 incur no SDLT whatsoever. Houses from £125,001 to £250,000 are charged at 1%. Houses from £250,001 to £500,000 are charged at 3%. From £500,000 to £1 million are charged at 4%, and finally, houses above the £1 million threshold are charged at 5%.
If you're a first time buyer, then the good news is that until 24th March 2012, you won't have to pay SDLT on any property as long as it costs below £250,000. To give an example, if your new house costs £240,000, you'll be saving £2,400, money that could kit out an entire living room!
Many websites offer Stamp Duty calculators, which allow you to work out just how much you'll have to pay on a property you're buying. For your convenience, here is a direct link to one of the calculators: http://www.qck.com/stamp-duty.html.