Know your Scottish property tax, now!
A levy on second home property transactions is coming to Scotland in April – so if you’re involved in the property market you need to understand what’s changing.
What are the changes?
Scotland’s Finance Secretary, John Swinney, is adopting a 3% levy on property purchases beyond a buyers main residence. This follows a similar move by the UK chancellor. Their aim is to address market issues faced by first time buyers.
The levy will add an additional 3% taxation onto effected transactions. It will apply to property deals which settle after April 1st.
All property transactions between £40, 000 and £144, 999 (which currently avoid tax) will be affected by the new levy. Property transactions below £40, 000 will remain unaffected.
What will this effect?
Future transactions, and those where the missives were concluded on or after December 16th 2015 which settle after April 1st will be affected.
Until April the market is likely to move swiftly as property deals which have been in the pipeline are pushed forward in order to conclude before the cut- off date.
The levy will also affect buyers who buy a new main residence without having sold their current property. If the first property is sold within 18 months a refund can be claimed.
Property purchased in the name of family members will be effected too. The new levy will be applied if ownership of the second property is in the name of a minor under sixteen, spouse, co-habitant or civil partner.
What should I do?
If you are in the process of buying a property be aware of dates. Know when you’re likely to settle as running a few days over could cost you.
Future purchases should be looked at in light of the new rates and budgets adjusted accordingly. As the rates apply to second home buyers the affect on the market remains to be seen.
You can work out comparative costs using a calculator for the new and old rates here.