Explaining The Tax Relief For First-Time Buyers In Scotland
On 30 June 2018 relief for first-time buyers on Land & Buildings Transaction Tax (LBTT), the tax applied to the purchase of properties in Scotland, came into effect. The tax relief was rolled out with surprisingly little fanfare so you could be forgiven for having missed this news, even if you have been keeping a keen eye on the property market.
Here's a look at what has changed, who will be eligible for the relief, and what impact it is likely to have on the property market.
What has changed?
Under the new first-time buyer tax relief, the zero tax threshold for first-time buyers has been raised from £145,000 to £175,000. In practical terms this means that those buying their first home will pay no tax on purchases up to the value of £175,000. On purchases over £175,000 they will pay £600 less than would have been the case prior to the relief coming into effect.
Who will benefit from the relief?
The relief will be applied to purchases by first-time buyers from 30 June 2018 onwards.
To be considered a first-time buyer in this instance you must not own, or have owned, another property in Scotland or elsewhere and you must intend to live in the property being purchased as your sole or main residence.
I’m a First-Time Buyer. I’m Buying With My Partner Who Owns a Property. Do I Qualify?
No. If you are buying in joint names both parties must be first-time buyers and both would need to intend to live in the property being purchased as their sole or main residence.
What Effect Will This Have On The Market?
The reality is that the new relief is unlikely to have a substantive impact on the market. The savings required to purchase a your first property need to cover the deposit, LBTT, legal fees and outlays, furniture costs, plus any amount that you wish to bid over and above the Home Report valuation.
The saving of up to £600, while certainly beneficial to the individual buyer, is not likely to make the difference between someone being able to buy a property or not. As a result, it is not likely to create any new sales.
What it will do is allow some first-time buyers, especially those in areas like Edinburgh where prices are higher, to put a little more towards the purchase price of their property. In a hotly contested market this will increase their chances of being able to secure a property where they face competition from other buyers.
Alternatively, those who benefit from the relief will have a little more cash to keep aside for home improvements, or to put towards a holiday or rainy day fund.
If you’re thinking of buying your first home, or if you have a question about buying or selling a property, contact Warners today on 0131 667 0232 or by emailing email@example.com and one of our team will be delighted to help.< Back