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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- Getting a second mortgage and buying a second home
- What does freehold mean?
- What credit score is needed for a mortgage?
- What is a 95% mortgage?
- Stamp duty on new builds
- Stamp duty for first-time buyers
- Stamp Duty Land Tax (SDLT) explained
- What to do if you’ve been rejected for a mortgage
- What is a mortgage?
- Can you apply for a mortgage with credit card debt?
- What to ask estate agents when purchasing a property
- Can I apply for a mortgage in retirement?
- What is porting a mortgage?
- What is a joint mortgage?
- Offset mortgages explained
- What is a mortgage in principle?
- What’s a mortgage deposit?
- Purchasing property with friends
- Costs and fees to consider when you’re buying a home
- Getting a no deposit mortgage with bad credit
- Do you have Right to Buy on your council home?
- Saving for a mortgage deposit
- What is a mortgage interview?
- How do credit scores affect mortgages?
- What to consider when applying for a mortgage if you’re self-employed
- Buying property – what is conveyancing?
- Buying a property – what is gazumping?
- Types of home improvement loans
- What happens to a mortgage after death?
- Getting credit-ready before applying for a mortgage
- How do mortgage applications work?
- Selling property – what to ask estate agents
- Selling property – estate agents vs doing it yourself
- Buying a leasehold property
- Help to Buy: equity loan
- London Help to Buy
- Mortgages for self build and custom build homes
- Help to Buy: Shared Ownership
- What is a Help to Buy: ISA?
- Resources for first-time buyers
- Buy-to-let mortgages explained
- What is remortgaging?
- How mortgage repayments work
- Understanding Mortgages
- Types of Mortgages
- Mortgage rates & decision
- Homebuyer's guide