The Government announced an extension to the Stamp Duty holiday to help cut the costs of buying a home. The holiday will make becoming a homeowner more affordable for many thousands of people.
What is Stamp Duty?
Stamp Duty is a tax that homebuyers pay. It usually applies to any property that costs over £125,000, or £300,000 for first-time buyers.
What is changing?
The new holiday means all homebuyers will now only pay Stamp Duty on properties that cost over £500,000.The holiday applies to any home sale completed in England and Northern Ireland from 8 July 2020 to 30th June 2021.
Will it help if you’re planning to buy with SO Resi shared ownership?
Yes it will – but to make the most of this great break, it’s important to understand how Stamp Duty works when you buy with shared ownership. Basically, there are two ways to pay:
Option 1: Pay Stamp Duty based on the full value of your home as soon as you buy the first share.
Usually: Costs more at first. [It can save money later, but] for most people it is only a good option if the full property value is below the tax-free allowance of £125,000 or £300,000.
With the holiday: This could now be a good option on homes costing up to £500,000.
Option 2: Pay Stamp Duty just on the share you first buy, and pay more later if you go on to buy a bigger share.
Usually: Costs less at first, but can be more expensive if you go on to own 80% or more of your home.
With the holiday: For most people, this option would only be sensible if the home you are buying is valued at over £500,000.
The above is just a quick guide to how Stamp Duty works and your options. If you are buying, or planning to buy a SO Resi shared ownership home, we always recommend talking to your solicitor or financial adviser about the best option for you before you make any decisions.
To find out more about the reduction in Stamp Duty visit the Government website >
https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates