Do I Pay Stamp Duty When I Sell My House?
Estimated reading time 6 minutes
Selling a house is fraught with three things, stress, delays, and fees. Unless you opt to sell via a cash house buyer of course, where the property is often sold fee-free, fast, and with minimal fuss. Should you be selling via the traditional market though, all three of those factors will likely be prevalent throughout your process.
One of the biggest concerns is the fees. You are spending a lot on marketing the property itself but then there are the solicitors’ fees, the estate agent fees, and more. One fee often questioned is stamp duty. You will be pleased to know that stamp duty when selling a house is not applicable. You’ll only pay stamp duty or SDLT when purchasing a new home.
In this blog we dive a little deeper so you understand stamp duty when selling your home and how you will still have to budget for it.
Do you pay stamp duty when you sell a house?
In a word, no. You do not pay stamp duty when you sell your house but, should you be selling a house at the same time as buying, you will need to factor in that stamp duty will be payable on the property you are purchasing. Although, sometimes, you can find yourself exempt from stamp duty, more of which to come later.
What is stamp duty?
If you are new to property purchasing, it would be worth knowing what stamp duty is so that you don’t get caught out by a surprise bill. Stamp Duty or SDLT is the tax paid when purchasing a property.
The amount owed is based on the price paid for the property with differing bands for different property values and ownership statuses.
A first-time buyer, for example, doesn’t have to pay stamp duty on any property up to a value of £425,000. If you have previously purchased a home though, you’ll find that stamp duty becomes payable once the property you buy is priced at more than £250,000.
Can stamp duty affect selling a house?
Despite you not being liable for stamp duty as the seller, the stamp duty applicable to the person buying your property may still affect you.
In some cases, the value of stamp duty to be paid may come as a surprise to the buyer, once it is factored in. They may see that it adds such substantial costs to the total amount paid for the home that it becomes unaffordable for them.
This could see a reduced offer being made, or several potential buyers backing off from pushing on with even making one.
This then alters your potential for finding a new home as you could find that you must accept a lower offer. This lower offer then leaves you with less to put into your new home.
If you don’t pay stamp duty when selling your home, what tax do you pay?
There is a saying isn’t there, that in life, two things are certain, death, and taxes. In property sales, despite the absence of stamp duty when selling a home, you will be required to pay other taxes.
Capital Gains Tax or GCT may be payable when you sell your home, but it depends on the property, and if you meet certain criteria.
If you pay the basic rate of income tax, you’ll pay a capital gains tax of either 18% or 28% on the value that the property has increased by. If you are a higher-rate income taxpayer, you’ll pay 28% CGT on the gains from the sale of your home.
Will I pay stamp duty if selling a non-residential property?
Stamp duty applies to non-residential properties but only for the buyer. If you are selling a commercial property, you will not pay any stamp duty, but the buyer will. Stamp duty for non-residential properties is calculated a little differently from the way it is for residential properties, and the threshold starts much lower. SDLT for non-residential properties is paid when £150,000 or more is spent on purchasing non-residential or mixed-use land or property. If you are selling a non-residential property, you should factor in the SDLT that the buyer will be paying, to ensure you list the property at a reasonable price.
Can I get a stamp duty refund on property I have sold?
You may be eligible for a stamp duty refund if you purchased a new main residence and still owned the previous home you lived in. You must sell this second home within three years of buying the new home, and the refund would only be due on the 3% surcharge applied to second properties.
Are there exemptions from stamp duty if selling my house and buying at the same time?
You’ll find that stamp duty will not apply if a property is left to you in a will. In this case, you would pay an inheritance tax instead.
You will also be exempt from stamp duty if you receive land or property in exchange for any payment of consideration as stipulated by HMRC. Divorce, for example.
There are also stamp duty relief options. These include:
- People buying multiple properties where one transaction or several linked ones include freehold or leasehold interests in more than one property.
- A building company buys your home and you buy a home from the building company.
- Your employer buys you a house due to relocation.
Whilst you won’t need to pay stamp duty when you sell a home, you should account for the potential costs it will incur for the buyer. If you price your property too high, people may not want to make an offer. You should also remember that whatever property you plan to buy when you sell your current home, stamp duty will still be applicable.
If you have found that your property is struggling to sell, perhaps with buyers put off by the potential stamp duty costs, you could opt for Bettermove to sell your house fast. We will operate as a cash house buyer and use our own funds to buy your property from you. With speed, no doubt important to you as a seller, we can complete the process in just seven days but are adaptable to a timeframe that suits you. Alternatively, we can market your property to a selection of pre-approved cash buyers via our website and the major property portals. If selling fast is your goal, you won’t get a better sale than one with Bettermove. Contact our fast house sale experts today to find out more.