Question: I have just exchanged contracts on a new-build flat for which I am paying £174,995. The flat should be ready in January 2010.
© Merrily Harpur
I am told that there is currently a stamp duty exemption that finishes at the end of this year. Can you tell me what stamp duty is and how I will benefit from this “holiday”?
Answer: Since September last year there has been a stamp duty land tax (SDLT) “holiday”. Chancellor Alistair Darling allowed a temporary exemption from the tax for people buying a home worth not more than £175,000, and this expires on 31 December, 2009.
SDLT is charged as a percentage of the amount paid for a property or land where it is bought or transferred and becomes payable when the amount paid is above a certain threshold.
The current threshold for residential property is £175,000 and the lowest rate is one per cent. SDLT is payable on the total value of the chargeable consideration for the property, which in your case will be the purchase price of £174,995.
If you complete the purchase of the flat after 31 December you will miss the SDLT holiday and liability for SDLT will arise as the threshold will revert to £125,000 on I January, 2010 and so you will have to pay SDLT calculated at one per cent of the purchase price.
As this is a new-build, contact the developer to check if there is any way that the flat will be ready on, or before, 31 December, 2009 so that you will not have to pay the SDLT.
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If you have a question for Fiona McNulty, email email@example.com. We regret that questions cannot be answered individually.
Fiona is a partner in the property team at Thring Townsend Lee & Pembertons Solicitors www.ttuk.com.