For the last 2 years first time buyers looking to get a foot on the property ladder for under £250,000 have been able to take advantage of the fact that they haven’t had to pay stamp duty.
The holiday has been a big relief for first time buyers who have been struggling to find large deposits and would then have to find more cash to pay their stamp duty bill.
After 24th March 2012 Stamp Duty will revert back to 1% of the property purchase price for properties between £125,000 and £250,000. Above £250,000 it jumps to 3% and below £125,000 there is no Stamp Duty.
Large savings can be made
So for someone buying a property that is worth £250,000, that is £2500 that would be added to the cost of buying the property, along with all the other fees that first time buyers pay (see our infographic for a detailed run through of the costs of buying your first home).
It was predicted that as the end of the Stamp Duty holiday loomed, there would be a rush of first time buyers on to the market. This has proved to be the case with more market activity at this time of the year than there usually is.
Don’t rush in to buying
Of course making a good saving on the tax on a property is a good thing for any first time buyer, but buyers need to be careful not to rush in to buying a property just so they can beat the stamp duty holiday.
That is where mistakes can be made. By being in a rush to get in there quick, buyers might miss out on crucial details to do with the lease, or the border of the property, the area where they are buying, or any number of things.
Of course some of these things will be highlighted by the buyers Solicitor, but by getting to that stage they will already owe Solicitors fees, so that will be an extra cost anyway.
It’s amazing how little time we spend making a decision about the biggest purchase of our lives. A look around the property with an estate agent once or twice, before committing hundreds of thousands of pounds is the norm for most people in the UK. So don’t make that process even riskier by rushing to avoid stamp duty.
It’s likely that over time, the value of your first property investment will become worth significantly more than you paid for it and the stamp duty you originally put down will be covered.
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