Can you add stamp duty to your mortgage?
Stamp duty (SDLT) is a tax that is levied when you acquire a house or land in England or Northern Ireland. The purchase price and whether the transaction is classified as residential or non-residential influence the amount you pay. If you are a first-time buyer, your price may be affected as well. With so many costs to consider in addition to the purchase price, you may be asking if stamp duty can be added to your mortgage.
An unexpected increase in employment and wages
Stamp duty has different tax bands and these are known as the SDLT
thresholds, which currently start at:
- £150,000 for non-residential properties and land
- £250,000 for residential properties
- £425,000 for first-time buyers purchasing residential properties with a value of £625,000 or less
- If your purchase has a value that falls under the relevant threshold, you won’t be liable to pay any stamp duty.
An unexpected increase in employment and wages
Stamp duty has different tax bands and these are known as the SDLT
thresholds, which currently start at:
- £150,000 for non-residential properties and land
- £250,000 for residential properties
- £425,000 for first-time buyers purchasing residential properties with a value of £625,000 or less
- If your purchase has a value that falls under the relevant threshold, you won’t be liable to pay any stamp duty.
Stamp duty costs for residential freehold properties
When buying a residential freehold property, the current stamp duty rates are:
- £0–£250,000: 0%
- £250,001–£925,000: 5%
- £925,001–£1.5 million: 10%
- Above £1.5 million: 12%
- This means that if you buy a home in Pimlico for £600,000, for example, the amount you’ll have to pay is calculated as:
- 0% on the first £250,000: £0
- 5% on the remaining £350,000: £17,500
- Therefore, the total amount payable for stamp duty is £17,500.
Stamp duty costs for new leasehold
sales and transfers
When you purchase a residential leasehold property, you have to pay stamp duty on the lease purchase price, which is known as the lease premium. The stamp duty rates detailed above apply to lease premiums. If the net present value (NPV), which is the total rent over the life of the lease, is higher than the current threshold of £250,000, then 1% is payable on the amount that’s over £250,000. This doesn’t apply to existing leases
Stamp duty costs for first-time buyers
When buying your first home, you benefit from stamp duty relief:
- £0–£425,000: 0%
- £425,001–£625,000: 5%
For example, if you buy your first home for £475,000 in Bexleyheath, the stamp duty you’ll have to pay will be:
- 0% on the first £425,000: £0
- 5% on the remaining £50,000: £2,500
- This means that the stamp duty payable for your new home as a first-time buyer is £2,500.
- However, if you purchase a property that’s valued at over £625,000, the relief won’t apply and you’ll have to pay the normal stamp duty rates.
Additional properties and
non-residential stamp duty costs
Different rates apply when buying an additional property or making a non-residential transaction.
When is stamp duty due?
Stamp duty must be paid within 14 days after closing on your home. Typically, your solicitor, conveyancer, or agent will pay it on your behalf and just add the tax amount to their costs. You can also file the return with HMRC and pay it yourself if you wish. But what if you don’t have that much money? Can you include the cost of stamp duty in your mortgage?