UK Stamp Duty on Investment Property Explained

Paying Stamp Duty On Investment Property

When buying an investment property, you need to consider all of the costs including the stamp duty. Stamp duty on investment property should be considered before you close the sale as you need to be able to pay this. There are a number of points that you should consider when looking at stamp duty on investment property.

What Is Stamp Duty?

If you have never bought a home in the United Kingdom before, you might not know what stamp duty is. Stamp duty is a land tax which is levied by the government. The tax is due for property which is bought in the United Kingdom, including any investment properties.

How Much Stamp Duty Will You Have To Pay?

All property in the UK will have stamp duty when you buy it. However, the amount that you have to pay will depend on 2 factors. These factors are the price of the property you are buying and whether or not it will be your primary residence. The stamp duty will then be charged on a tiered scale.

The more the property cost, the more you will have to pay in stamp duty. If the property is below the set amount of £125,000, you will not have to pay stamp duty. If the property is an investment property, you will not have to pay stamp duty, but you will be subject to a stamp duty surcharge. The surcharge will only be on second homes and investment property.

The surcharge will be a standard 3% of the property value and will be added to the stamp duty that you have to pay. This will increase the overall tax that you are charged on your investment property and you need to consider this.

stamp duty on investment property

When Is The Stamp Duty Paid?

When you buy an investment property, you will need to complete an SDLT return. This return will have to be submitted to HMRC after the close of the property sale. This tells the revenue service that the property has been purchased and that stamp duty will now be due. After the completion of this return, you will have 30 days to pay the stamp duty.

How Do You Pay The Stamp Duty?

While it is possible to pay the stamp duty yourself, most property investors in the country will leave this to their solicitor. If you pay the stamp duty yourself, you will have to follow the instructions that HMRC provides to you. If you leave this to your solicitor, they will handle the actual payment but you have to provide the funds to them. Regardless of the way that you handle the payment, you will be liable for ensuring that the stamp duty is paid in time.

Is Stamp Duty Tax Deductible?

There are a lot of people who wonder if stamp duty is tax deductible because it is paid on an investment property. The short answer to this will be no, you cannot deduct stamp duty as a business expense on your tax return. The only deductions you can make regarding your investment property will be repairs, maintenance, insurance and general running costs.