Stamp duty on second homes and buy-to-let properties
If you’re planning on buying a second home or buying to let in England or Northern Ireland, you’ll likely have to pay Stamp Duty Land Tax (SDLT). Find out what counts as a second property and buy-to-let, what the stamp duty rules are for both, and whether some types of homes are exempted from this tax.
What is considered a second home?
Generally speaking, if you already own a home, your new purchase is labelled a second home. This is true whether you’re making your second home your primary residence or if you’re buying a second house and renting out the first.
What is buy-to-let?
Buy-to-let is when you’re purchasing a property to rent it out to one or more tenants. It can be a source of income for you.
What are the rules for stamp duty land tax on second houses and buy-to-let properties?
The stamp duty rates for second homes and buy-to-let properties vary, depending on price band. These are the rates as of April 2016:
|Property or lease premium||Stamp duty rate|
|Up to £125,000||3%|
|The portion from £125,001 to £250,000||5%|
|The portion from £250,001 to £925,000||8%|
|The portion from £925,001 to £1.5 million||13%|
For example, if you’re buying a freehold property at £300,000, the stamp duty you’ll have to pay is:
- 3% on the first £125,000 = £3,750
- 5% on the next £125,000 = £6,250
- 8% on the remaining = £4,000
- Total stamp duty tax = £14,000
You can also calculate how much stamp duty you’ll have to pay on any property purchase using HMRC’s Stamp Duty Land Tax calculator. It’s important to check before you agree on a purchase.
On which second homes and buy-to-let properties are you exempt from paying stamp duty?
Some second properties are exempt from stamp duty in some cases. These include the following:
- Properties bought for less than £40,000
- Caravans, mobile homes or houseboats
- If you’re planning on living in your new home but don’t sell your first immediately – in this case, you may be able to claim a refund if you sell your previous home in under 36 months.
Bear in mind that the rules are different depending on your situation. There are different rates of stamp duty for first-time buyers ..
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