why do you have to pay stamp duty
Stamp Duty Land Tax is a controversial issue for some. Originally introduced as a historic tax in 1694, it is something that is unavoidable if you are buying a house. You must pay this tax by the official moving-in date (or possession date) of your new home. The that we recognize today was first introduced in 2003, and has just undergone the biggest change since it was introduced. How does stamp duty work? If involved in the purchase process, you should discuss Stamp Duty Land Tax with your solicitor, so that they can ensure that you do not miss the payment deadline. Remember, only the buyer will pay stamp duty - not the seller. used to be exempt from stamp duty, but this changed on the 24
March 2012. Now, just like anybody else, - whether the property is freehold or leasehold. But why do we need to pay it at all? Is stamp duty a necessary tax? When purchasing a property, the ownership of the land changes from the previous owner to you (the new occupier) Б and it must be legally and officially registered. This requires a Certificate of Land Ownership from the HMRC, and the only way to get that is on receipt of the stamp duty payment. If you donБt pay stamp duty on your new home, you wonБt be allowed to officially purchase the property (unless youБre exempt, see below). However your solicitor will be able to deal with any issues connected with Stamp Duty Land Tax. Stamp duty is a necessary tax that must be paid on all homes bought over бе125,000. However the new changes introduced mean that you may pay less stamp duty than under the old rules. David Hollingworth, Head of Communications at London and Country, says that the new changes to stamp duty have made the market a little bit fairer. БStamp Duty Land Tax isnБt something that can be avoided when buying a home, although the new stamp duty structure introduced in December 2014 has helped smooth out the huge jumps in the cost at certain prices that was an issue with the previous method of calculation,Б he said.
БNonetheless itБs still certainly a cost that needs to be accounted for when budgeting for a move and can lead some to consider improving their current home rather than move. Б There are several things you can do in order to prepare yourself for a stamp duty payment, which could amount to thousands: Subtract the value of certain items from the total price of the property Бcarpets, curtains, light fittings and other similar items can all be subtracted from the total house price when calculating your stamp duty. Look at a calculator Б using a Choose your area Б some areas, usually those that are more БdisadvantagedБ, offer some stamp duty discount and rebates. Choose a new build Б if you choose certain new build properties, sometimes that particular housing company will pay for your stamp duty as part of the package. Or you may be eligible for a tax break if your home is registered as zero-carbon. No tax on the first бе125,000 paid 2% on the portion up to бе250,000 5% on the portion up to бе925,000 10% on the portion up to бе1. 5 million As you can see, the thresholds are much more gradual, without the steep jumps in price. Those that oppose the new changes claim that the move could potentially raise housing demand and affect prices so much that the savings made on Stamp Duty will become almost entirely irrelevant. For most people, Stamp Duty Land Tax is an inevitable part of the purchasing process, and itБs not the only to deal with.
A recent online Mortgageport poll found that 100% of respondents believe stamp duty should be abolished. But did you know that for some NSW home buyers, it already has been? What is stamp duty? Stamp duty is a tax charged by the government on the sale of property. It is designed to cover the cost of the legal documents for the transaction. The main document is the ownership title of the property and a search to ensure you are buying the property from the right person. The Federal Government of Australia itself does not charge stamp duty. Stamp duty is levied by the individual states and the rates of stamp duty vary from state to state. A study in 2010 by В stated that stamp duty was an вinefficientв tax and recommended stamp duty on property should be abolished. В president Wayne Stewart agreed that stamp duty is a disincentive to investment in the property market, and welcomed the Henry tax review recommendation for its abolition. Recent changes to stamp duty You may be interested to know thatВ in Queensland, NSW, the Northern Territory and Western Australia receive a 100 percent stamp duty exemption or rebate. The July 2010 NSW budget scrapped stamp duty for homes worth up to $600,000 that are bought. This is granted prior to construction and includes apartments and units. It also includes vacant land up to $400,000 where construction has not yet started. To qualify for zero stamp duty, you will have to purchase a property before the foundations are laid. Buyers can save up to $22,490 for a house or $13,490 for vacant land. A further 25 percent discount applies to homes already under construction or newly-completed homes worth up to $600,000. This is a maximum saving of $5,622 for a home and $3,372 for vacant land.
Stamp duty was also abolished for over 65 s who sell their home to move in to a new dwelling worth up to $600,000. The new concessions apply for contracts entered into between July 1, 2010 and July 1, 2012, and the development must be completed by December 2012 or December 2013 in some cases. If you buy vacant land, you must start building within six months of exchange of contracts for the land component. The changes were made to stimulate the housing market and increase housing production, however there has been a lot of debate about whether these measures will actually benefit home-buyers. The changes could have the unintended consequence of pushing up property prices even further if demand for this type of property outstrips supply. president David Airey said while the cap is a bit low given the median price of homes in Sydney, any initiative to reduce dependence on taxes is to be commended. How does NSW stamp duty compare against other states? The March Real Estate Institute of Victoria в2010 Property Price Reportв revealed Victorians pay the highest stamp duties in any state. On a family home of $900,000 New South Walesвs non first home buyers would pay $35,990 in stamp duty. This is compared to: $49,070 in Victoria, $43,330 in South Australia, $42,300 in Western Australia, $33,550 in Tasmania and $26,350 in Queensland. It is important to factor-in the such as stamp duty, before you buy a property, as these can add considerably to the overall price. There are ways to reduce or avoid these extra charges, so itвs essential to be aware of all the current government concessions, such as the NSW Home Builders Bonus, exemptions and rebates before you start.
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