Q&A: New 3% Stamp Duty surcharge on second homes - Zoopla
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Q. Do plots of land count?
A. Just like regular Stamp Duty, the 3% loading will only apply to purchases of residential property. A plot of land (even if it will subsequently be used for a home) is not counted as residential, so the surcharge will never apply.
Similarly, if you already own a plot of land and are buying an additional property, it will not be considered for purposes of the higher tax.
Ask an expert: 'Can I avoid extra stamp duty by building my second home?'
My in-laws are gifting us a building plot. We plan to build a new home and keep our current house to rent out. The value of the plot is £107,000, the build cost is £180,000 and the final value will be around £400,000. Will we be liable for stamp duty on any part of this, and will the extra stamp duty charge for second homes apply to us? RA, via email
Generally speaking, building a house incurs far less stamp duty than buying one, as stamp duty is paid on the purchase price of the land rather than the value of the finished home.
That means a home worth £400,000 built on a £107,000 plot of land would be stamp-duty free, as the land wouldn’t exceed the threshold (£125,000 for residential or £150,000 for non-residential) to pay stamp duty.
So the smart thing now is to buy a plot of land (hopefully under £125K), which attracts zero Stamp Duty, get an house built on it.
Q. Do plots of land count?
A. Just like regular Stamp Duty, the 3% loading will only apply to purchases of residential property. A plot of land (even if it will subsequently be used for a home) is not counted as residential, so the surcharge will never apply.
Similarly, if you already own a plot of land and are buying an additional property, it will not be considered for purposes of the higher tax.
Ask an expert: 'Can I avoid extra stamp duty by building my second home?'
My in-laws are gifting us a building plot. We plan to build a new home and keep our current house to rent out. The value of the plot is £107,000, the build cost is £180,000 and the final value will be around £400,000. Will we be liable for stamp duty on any part of this, and will the extra stamp duty charge for second homes apply to us? RA, via email
Generally speaking, building a house incurs far less stamp duty than buying one, as stamp duty is paid on the purchase price of the land rather than the value of the finished home.
That means a home worth £400,000 built on a £107,000 plot of land would be stamp-duty free, as the land wouldn’t exceed the threshold (£125,000 for residential or £150,000 for non-residential) to pay stamp duty.
So the smart thing now is to buy a plot of land (hopefully under £125K), which attracts zero Stamp Duty, get an house built on it.
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