13 Jul 2020
The Scottish Government has confirmed that homebuyers will be able to take advantage of reduced rates of Land and Buildings Transaction Tax (LBTT) from the middle of this week.
The threshold at which LBTT begins to be paid will rise from £145,000 to £250,000 from Wednesday (15 July), saving buyers tens of millions of pounds in property tax.
The government estimates that, excluding the Additional Dwelling Supplement, around 80% of home purchasers will pay no LBTT on their property purchase as a result of the changes.
The rates for the Additional Dwelling Supplement - which is the extra tax paid on a second home - and non-residential LBTT remain unchanged.
People buying a home at under £250,000 will pay no tax when the changes come into effect.
For example, someone buying a home today at £225,000 would be due £1,600 in tax - but from Wednesday that tax liability would be zero.
Home movers buying a home costing more than £250,000 will save £2,100 in total.
Data from Revenue Scotland shows that between March 2019 and March 2020, more than 38,000 people paid LBTT in £145,000 to £250,000 band. In total they paid £29.9million in tax.
Based on the same data, the changes mean than an extra 3,000 people a month will pay no tax on their move.
Finance Secretary Kate Forbes said the new rates will remain in place until 31 March 2021 and are designed to give a short-term boost to the economy.
"Overall, increasing the LBTT threshold will help increase housing market activity, boost the construction sector and stimulate our economy," she said.
The legislation required to make the changes will be placed before the Scottish Parliament this week and will require to be approved within 28-days to remain in force
The Scottish Government is also pumping an extra £50million into the First Home Fund to help 2,000 more first-time buyers get on to the property ladder.
The scheme, which offers buyers an interest-free loan of up to £25,000 towards the cost of buying a home, has already helped thousands of buyers since launching last year.
You can read more about the First Home Fund by clicking here.
If you are thinking of moving home, looking for guidance on the First Home Fund or would like to speak to an independent mortgage adviser about how much you can borrow, click here to speak to one of our property experts.