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The land transaction tax: what you need to know

In England we call it stamp duty but in wales they call it the land transaction tax. This is the tax you pay when you purchase a home.

In this brief guide we will go through how it works and what you can expect to pay.

What is the land transaction tax?

The land transaction tax is the property tax you pay in wales. You pay it on any properties(including freehold and leasehold) which cost more that £180,000 or if it is your second home and it costs more than £40,000.

The tax applies for both when you buy with a mortgage or when you pay outright for a property.

You can use a land transaction tax calculator to see what your likely payment will be.

You will need to pay your land transaction tax once your property sale has gone through. You should contact the welsh revenue authority on specific deadlines or timelines.

How is land transaction tax calculated?

There are several land transaction tax bands. If your property price pays falls within a certain band then this is the land transaction tax band you will pay.

The land transaction tax bands are as follows:

Land transaction tax for first -time buyers?

Unlike in England where there is a current stamp duty relief for first time buyers there is no such relief for first time buyers who pay the land transaction tax.

Do you pay land transaction tax on second homes?

Yes. If you already have one residential home and you get a second one for either buy to let purposes or residential purposes then you will pay land transaction tax on each property.

The land transaction tax on second properties is 3% more of the standard rates for each band on properties more than £40,000.

How to pay the land transaction tax

The payment of the land transaction tax will usually be handled by your conveyancer or solicitor. You must ensure they do this if not you will still be held responsible. You still need to file a land transaction tax return even when you have no land transaction tax to pay.

The land transaction tax only applied to the portion of the property price in the tax band.

Purchase price Land transaction tax due
Up to £180,000 0%
£180,001- £250,000 3%
£250,001 -£400,000 5%
£400,001 - £700,000 7.5%
£700,001- £1;500,000 10%
£1,500,001+ 12%

When you shouldn't pay the land transaction tax

  • If you get property as a gift then no land transaction tax is due

  • If you get property through a will then no land transaction tax is due except you take on a mortgage as well and the mortgage is more than the land transaction tax which will normally have been due.

  • If your first home is less than £180,000 then land transaction tax will not be due

  • If the property price is just a few hundred pounds into another tax band, then ask the seller if they will accept a lower price

  • If you are transferring the property as part of a divorce then there is no land transaction tax to pay for the recipient. You will have to pay land transaction tax if you are transferring your ownership in a joint ownership to the other owner.

  • If you exchange properties with someone then you both will have to pay land transaction tax on the value of your new homes.

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The land transaction tax: what you need to know
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