taxWhen you buy and sell property, it’s important to be aware of your property tax liabilities so that you can budget accordingly and of course, not fall out with the tax man. Here we provide a run through of the different tax obligations for Homebuyers and Landlords.

Unfortunately, property ownership and taxes seem to go hand in hand from Stamp Duty and Capital Gains to Income and Council Tax. However, with some careful homework, you can prepare and avoid mistakes.

Home Buyers

If you are moving home or buying for the first time, your main concern will be with Stamp Duty. This is a graduated tax based on a percentage of the property purchase price, but only applies over £125,000. Since 2014, this tax is now only paid on the amounts falling in particular bands, rather than the full amount.  For example, a buyer of a £500,000 property will pay nothing on the first £125,000, then 2% on the portion between £125,001 – £250,000 (£2,500) and then 5% on the remainder (£12,500), giving a total stamp duty amount of £15,000.

£0 – £125,000


£125,001 – £250,000


£250,001 – £925,000


£925,001 – £1,500,000


Over £1,500,000


Although you can pay your Stamp Duty bill yourself, usually your solicitor will deal with submitting the return and payment for you. It must be submitted within 30 days of completion, otherwise you will be charged a £100 fine plus interest.


Since April 1st 2016, if you are purchasing an additional property to your main residence, you have to pay a further 3% flat rate surcharge on the entire property price. This means that a £300,000 property will not receive a stamp duty bill of £14,000, compared to the £5,000 bill before. If you’re moving home and temporarily own two properties, you have three years to apply for a refund from the HMRC.

The good news on the 3% surcharge is that, if you pay Capital Gains Tax on the sale profits of an additional home, you can offset the cost of the surcharge against your tax bill.

When you start renting out a property, you must tell HM Revenue & Customs as you may have to pay tax on the rental income. If you rent out more than one property and being a Landlord is your main occupation, you may also have to pay Class 2 National Insurance.

Tax ruled and regulations are constantly changing so it is a good idea to seek advice from a specialist accountant as there are different tax allowances for residential properties, holiday lettings and commercial properties.

Since April this year, the tax relief rules on mortgage relief have changed for higher rate tax payers as well. The relief used to be the Landlord’s rate of income tax (i.e. up to 45%), it will now only be available at 20% thus increasing income tax for those in higher rate tax bands.

When a Landlord comes to sell a property, they will also be liable for Capital Gains Tax. There are special reductions if it has been your main residence at any point, but there are future changes regarding how long you have before you need to pay it. While previously you could have had up to 18 months in which to pay, from 2019, any Capital Gains Tax will be payable within 30 days.

At Mackenzie Smith we pride ourselves on our helpful knowledgeable advice, if you are looking to buy, sell, let or rent, please call the relevant office to you, we are always here to help.

Lettings – 01252 514000

Ash Vale – 01252 353030

Farnborough – 01252 375999

Fleet – 01252 812121

Hook – 01256 764666

Hartley Wintney – 01252 844015