What is Land Transaction Tax (LTT)?
Land Transaction Tax (LTT) was introduced by the Welsh Assembly Government in 2018 in an effort to make stamp duty fairer to Welsh home buyers, due to the lower average house prices compared with England. It generally mirrors stamp duty in that it’s a tiered tax paid upon completion of a property purchase, with different tax bands per portion of property value.
Changes due to Covid-19.
Prior to the Covid-19 pandemic, you would only pay tax on a purchase over £180,000 where that property will be your main residence, however this threshold has been temporarily raised to £250,000 in an effort to boost the housing market. For the time being, this has removed a tax of 3.5% that would be charged on houses sold between £180,001 and £250,000, but this is set to return to the original rates in July 2021. This potentially means that completing on a house purchase before 30th June could have saved you thousands.
Investment property and second homes
With second and additional homes however, you will have to pay the higher residential rates of LTT. If you already own a property and choose to buy another worth more that £40,000, your LTT bill will start from 4% climbing with each tier of value. This is definitely something that needs to be considered when looking at the total cost of buying an investment property, but can be often overlooked as you can be busy thinking of all of the other expenses that come with buying property.
How is it paid?
Whether it’s your first home, or the latest addition to your portfolio, if you have LTT to pay it has to be paid within 30 days of the day after completion. Even if there is no LTT due you still have to complete an LTT Return within this time. This is most often completed by your solicitor, however the responsibility is yours to ensure it is completed on time.
For the moment, everything seems to be pointing to LTT returning to the pre-covid system from 1st July 2021 as per Welsh Government guidelines, however they may yet decide to extend this further. If you’re thinking of buying or selling a property within South Wales, whether you’re trying to get on the property ladder or already a few rungs up, we can help you. Just get in touch with our property experts on 029 2021 3244 or emailing us at enquiries@chanceryproperties.co.uk.
