Stamp duty regulation for buy-to-let property can become confusing as how much stamp duty you pay will depend on what type of buyer you are and the overall value of the property you are purchasing. If you have sold or are looking to sell your buy-to-let home get in touch with CapEx Tax Specialists today to see if you are eligible for a buy-to-let tax relief on stamp duty.

Multiple Dwellings

What Is A Buy-To-Let Property?

A buy-to-let property is one that is specifically purchased to be rented out. Those who buy these properties are subject to a higher rate of stamp duty land tax this is because buy-to-let properties offer their owners an opportunity to earn money from the investment at a later date via rent payments.

If you’re buying a buy-to-let property the vast majority of buyers will be buying their second home and so will be charged an additional rate of stamp duty land tax. This higher rate is a surcharge and so must be paid on top of your stamp duty land tax bill. In the stamp duty land tax regulations technically first-time buyers would not be subject to the higher rates of land tax however, the likelihood of a first-time buyer purchasing such a property is highly unlikely.

Is Stamp Duty Land Tax Payable On Buy-To-Let Property?

Yes, in short, stamp duty land tax is payable on buy-to-let property and there a two types of stamp duty that buyers should be aware of on residential buy-to-let properties, these are as follows:

  • A tiered rate of stamp duty that starts from £150,000
  • A 3% stamp duty higher rate charge on property that exceeds £125,000 and is a second property

How Much Does Stamp Duty Cost On Buy-To-Let Property?

As with normal stamp duty land tax payments, the additional surcharges are also charged in a tiered system so you would need to pay an additional 3% on the first £125,000 and then an additional 5% on anything within £125,001 and £250,000. You will also have to pay the additional rates when you buy a property in Wales or Scotland but their stamp duty is calculated differently and so will have different rates.

Although 3% doesn’t sound like a huge amount more to pay it can quickly add up when you take into account the price of a property. For example, if you buy a second property for £230,000 you will have to pay an additional 3% on the first £125,000 and then an additional 5% on the amount remaining over £125,000.

Second properties under £40,000 and all mobile homes, boat houses and caravans do not have to pay the additional surcharge on their stamp duty land tax. You may also be able to be advised on claiming a refund on stamp duty for buy-to-let properties if you have bought a second home but plan to sell your first property but for this to apply you just sell your original property within 3 years of buying your second property.

uninhabitable properties

Are There Any Exceptions Or Buy-To-Let Tax Relief On Stamp Duty?

There are no exemptions for buy-to-let properties or buy-to-let tax relief on stamp duty as everyone who owns a second property is subject to additional charges. 

Even those who are married or in a civil partnership or even just buying a house together without being partners need to pay to additional buy-to-let stamp duty charges regardless of how many properties the two of you already own as if you are classed as legally together then you are seen as a single entity. 

Companies who purchase buy-to-let property are also subject to paying higher charges on stamp duty land tax however if they’re buying multiple properties in one transaction then they may be eligible for multiple dwelling relief.

Claiming A Refund On Buy-To-Let Properties

You could be eligible for claiming a refund on buy-to-let property in some cases for example, if you have sold your main residence or now live in your second home then HMRC could grant you a refund on the surcharges you have paid.

It is also important to note that buy-to-let stamp duty can be deducted from capital gains so that you won’t be charged twice for tax.

How Can CapEx Tax Specialists Help?

If you think that you may have overpaid in stamp duty for a buy-to-let property or have sold or are looking to sell your second home then contact us today so our tax specialists can assess your claim and advise you accordingly. We have plenty of experience in dealing with stamp duty refunds and claims so we can help you process your application and see where you could claim tax refunds.

Frequently Asked Questions About Buy-To-Let Property And Stamp Duty

You won’t pay buy-to-let stamp duty unless you have purchased a second home with the intention of renting the property out in the future. If you wish to make a claim then you must file your stamp duty return with HMRC including stamp duty on buy-to-let property within 14 days from the date of completion.

The government updated stamp duty laws in 2015 in favour of first-time buyers as the housing market was stagnating. In charging those who purchased buy-to-let properties more in stamp duty this discouraged the purchase of second homes leaving more properties available for first-time buyers to purchase.

You could be eligible for claiming a refund on buy-to-let stamp duty under certain conditions if you think that you may be eligible to claim a stamp duty refund then contact us today and our specialists will help assist you in putting together your case.