Avoiding stamp duty: loopholes exposed

Posted on: 02nd January 2023 | Filled under: How to Sell a House
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There are various loopholes, and systems homeowners are using to either avoid paying stamp duty or reduce how much they owe.

While you won’t necessarily be able to get out of paying stamp duty (and you shouldn’t, as this is against the law!), there are some loopholes which may help you reduce how much you pay.

Read on to find out more about some of the loopholes being used in South Wales to avoid paying stamp duty.

If you are selling a house in South Wales and would like a cash offer for it, contact me today on 02920 501 001. We buy any house in any condition here in South Wales. Call me today or click the button below to start the online cash offer form:

What is stamp duty?

Stamp duty land tax (SDLT) is a tax that you are required to pay when you buy a property. In Wales, it is more widely known as land transaction tax (LTT). This is only paid on homes over a certain amount, with the threshold having recently been increased, so it’s worth checking whether stamp duty even applies to you.

In Wales, the lowest threshold to start paying stamp duty is £225k, so if the home you are buying is below this, then you’re exempt from SDLT anyway. Otherwise, you may want to check which band you fall under.

Loopholes to avoid stamp duty

If stamp duty does apply to you, there are a few things you can try to reduce the amount you have to pay. Here are just a few of the things you could try:

Negotiate the property price

One of the best ways to lower how much stamp duty you pay is to haggle down the price. Since the amount of tax you pay is based on the price of the property, you could reduce your stamp duty by agreeing to a lower purchase price, especially if the property is at the bottom end of a band.

The current LTT for single property owners in Wales is:

Less than £225k: 0%

£225k to £400k: 6%

£400k to £750k: 7.5%

£750k to £1.5m: 10%

Rest over £1.5m: 12%

Keep costs separate

As we’ve already explained, your stamp duty payment will be a percentage of the price you pay overall for the property. If the current owner is including extras such as fittings, furniture or appliances in the purchase price, you could end up paying more tax simply because these add to the total cost of the property. For this reason, you could save money on stamp duty by asking the current owner to deduct any removable fixtures and fittings.

Transfer the property

In some circumstances, such as if a property has been handed down to you in a will or as a gift, you may be able to avoid paying stamp duty. However, this depends on whether or not the home has been transferred to you mortgage-free.

If it has, you won’t have to pay stamp duty on the market value of the property. But you should be aware that if a share of the property is transferred to you and you take on responsibility for some or all of the mortgage, you will likely have to pay stamp duty.

Build your own home

This is one of the more extreme loopholes, but if you are really serious about avoiding LTT, you could go to the effort of building your own home. If this is something that is plausible for you, you will benefit from only paying the stamp duty land tax and not having to pay the stamp duty tax on both land and property value. Of course, this is a method that is only possible for a limited few, but if you have the means to construct your own home, then you could save a lot here.

Buy out your partner

If you’re married or in a civil partnership and end up splitting up with your partner, you may be able to buy out your partner’s shares in the property without having to pay added stamp duty. If you’re not married or in a civil partnership, however, these exceptions may not apply, so make sure to check before you buy or agree to any terms.

Looking to sell your property?

If you’re buying a new home, it’s likely you need to sell your current one first. If you are looking to sell your old property but don’t know where to start, make sure to contact Mark King Properties today.

Mark King is a property buyer based in South Wales and is eager to help local people by helping them to sell quickly and without the stress, that’s for any house, no matter its condition, quickly and for cash. This is the best way to get a guaranteed sale, and you can even have the property complete in as little as 7 days! So, do get in touch with us and get your journey to buying a new home started right now.

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Types of Property Fraud; All You Need to Know
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How to Avoid Selling Your House to Pay for Care
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