When you are going through the process of selling and purchasing a home, there is a seemingly endless amount of fees and payments you have to make that come out of nowhere. You agreed to pay these fees when you signed a contract to sell or purchase a home, but many people do not understand how many fees can accrue over the selling and buying period. Money is constantly being discussed and purchasing a home is such a large investment that some of these fees are overlooked and just blindly paid for because for many people who are uninformed, that may just seem like a part of what you have to do when you purchase a home.
Buying a home is a long process and involves a long list of people who need to get paid. The government has to be paid as well. Stamp duty is a tax that is required to be paid when purchasing a home over a certain price. For the time being, the threshold for stamp duty is £500,000. If your main home is purchased at a price under £500,000, you currently get to avoid stamp duty. This "Stamp Duty Holiday" is set to hold up until June 2021 and then reduce until September 2021. If you purchase your main home under that price before June 2021, you owe 0% in stamp duty charges. Because of the Coronavirus Pandemic, this date has been pushed back multiple times.
In this article, we will look at:
This threshold is the one used for your main home. Your main home is the one you and your family currently or permanently reside. If you own multiple homes, your main home is the residence that is near your children's schools, your place of work, where you are registered to vote, and where the family spends the majority of the year.
There are some ways to avoid paying stamp duty if your time and money is flexible. Or -- you know how to haggle a price.
If you own a second home, the threshold for stamp duty is significantly lower. Currently, if you own a second home over £40,000, you will owe stamp duty. For a second home, the rate is about 3% higher than the main residence.
Second homes are not only holiday houses. People end up owning a second home for many reasons. Sometimes they purchase a home for a retired or dependent family member to live in. If the property is purchased as an investment or a buy-to-let property, it qualifies for stamp duty. If you have a home that qualifies as a main residence and you purchase another home, then that second home will qualify for stamp tax regardless of the price.
If you are selling your main house, purchasing a new one that is intended to be the main residence and you currently own another property that you do not live in, many times stamp duty will not qualify. Or at least it will not qualify up until £500,000. If you are purchasing the new home to be your main residence, you will receive the threshold and interest rate of main residence stamp duty.
Avoiding stamp duty on your second home can be a little more complicated. The threshold for a second home is much lower, so unless you are able to find a home under £40,000, you are likely going to be required to pay stamp duty on the second resident. It is not impossible to find a home under £40,000, but unless you are looking at mobile homes, boathouses, caravans, or other types of intentionally tiny homes, land you might have a difficult time finding a second home under the £40,000 threshold.
If you purchase a second home and pay the required stamp duty because your home did not fall underneath the threshold, there may be a way for you to avoid it if you plan on moving in and selling your main residence within the next three years.
If you end up selling your first home and switching your main residency to your second home within three years or purchasing it, you can request a refund on the stamp duty you paid when you purchased the home initially. In order to do this, you have to file paperwork promptly within the timeframe, otherwise, your situation will not be eligible for a refund. Occasionally items can get mixed up in paperwork and government organisations may not have the full picture of your living situation. If you were wrongly charged stamp tax for not living in a certain home, you can claim a refund if you are able to prove your residency in that home. You can do this by providing your place of work or your children's school registration.
If you are wanting a refund, you can request it online and submit it to the HRMC. They will usually get back to you within fifteen days and state the partial or full amount of refund that you will be awarded.
Occasionally, there may be an accidental situation where you unintentionally end up owning two homes. If you are purchasing a home and are a part of a buying and selling chain or you purchase your new home before the sale of your own is finalized, you may end up in the possession of two homes. If the sale of your old home falls through because of a chain or other reason, this could be the case. House sales fall through all the time. It is extremely common and happens more often than you might think. Financials are usually the cause in this situation because the process of getting approved for loans can be complicated and some lenders require certain contingencies from the people they are lending to.
When this happens, you may need to sell your property quickly. If the sale of your home has fallen through and you need a quick sale, a cash property buyer is the perfect person to turn to. Here at Quick Property Buyer we can purchase your home and keep you from potentially having to pay a required stamp duty tax for owning two homes. We will visit the property and give you a price that gives you great value you for your home. The best part is, you can have the cash from the sale in your pocket in as little as seven days. Quick Property Buyer is available to help you sell your home quickly and avoid the burden of stamp duty tax.