Buying your first home is one of life’s major milestones. A house is also a major purchase that comes with a long list of requirements, fees, and taxes. These requirements may overwhelm first-time buyers.
David Hannah from Cornerstone can help clear up any confusion and ensure that you understand the costs that come with buying a house. As a Chartered Tax Advisor and Chartered Accountant, Mr Hannah has the qualifications needed to assist during the house-buying process. Keep reading to learn more about the role of a tax advisor when buying your first home.
Tax Advisors Help Buyers Understand Their Tax Responsibilities
Most people visit a tax specialist for their income taxes, property taxes, and capital gains. You should also seek the help of a tax expert when it comes to buying a house. A tax advisor can ensure that you avoid overpaying or underestimating your land tax.
As with most purchases, buying a home comes with tax responsibilities, including the Stamp Duty Land Tax (SDLT). However, figuring out to calculate the SDLT can be confusing for certain groups, including first-time buyers, non-UK residents, and owners of multiple homes.
What Is the Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a tax charged by the UK government when buying a residential property. The amount that you owe in taxes on a new home depends on the value of the property, the purchase date, and whether you are a first-time buyer.
If the property is valued at £250,000 or less, you don’t need to pay the land tax. For properties valued at over £250,000, you pay 0% tax on the first £250,000 and 5% to 12% on the remaining value. The next £675,000 is taxed at a 5% rate.
For example, a home has a value of £300,000. You pay 0% on the first £250,000 and 5% on the remaining £50,000.
First-Time Home Buyers May Qualify for a Discount
One of the reasons to contact a tax specialist, such as David Hannah from Cornerstone, is to determine if you qualify for tax relief as a first-time buyer.
If you are buying your first home, you do not need to pay the SDLT on the first £425,000 of the property’s value. The rate for the next £200,000 is just 5%. Without the tax relief for first-time house buyers, you would need to pay 5% on anything above £250,000.
Before moving forward with your plans to buy a home, consider consulting with a tax advisor.
