Stamp Duty on a Second Home: Your Guide

When buying a second property – whether it’s a buy to let or a holiday home – it’s important to think about the tax implications. In this guide, we’ve answered some of the most frequently asked questions around stamp duty on a second property. These include:

• How much is stamp duty on a second home?
• Do you always have to pay stamp duty on a second home?
• Is stamp duty still payable if the property is abroad?
• What if my partner already owns a property but I don’t?
• Do I need to pay more stamp duty if I’m buying a new home after divorce?

We’ve also explained what you can do if you think you’re owed a stamp duty refund, and how a conveyancing solicitor can help you.

How much is stamp duty on a second home?

When you buy a residential home in England or Northern Ireland, you’ll usually pay stamp duty if the property exceeds £250,000 in value. But when you’re buying a second home, the threshold is set much lower at £40,000.

Here’s what you can expect to pay, depending on the value of the property you’re buying:

Property Value	Second Home Stamp Duty Rate
£40,000 to £250,000	5%
£250,001 to £925,000	10%
£925,001 to £1.5m	15%
Over £1.5m	17%

It’s important to note that these rates only apply in England and Northern Ireland. In Scotland, you’ll pay what is known as Land and Buildings Transaction Tax (LBTT) and in Wales, it is referred to as Land Transaction Tax (LTT). 

Do you always have to pay stamp duty on a second home?

More often than not, you will be required to pay additional stamp duty on a second property. But there are some exceptions, including:

• If the property is worth less than £40,000
• If you’re buying a caravan, houseboat or mobile home (regardless of the price you pay for it)
• If you’re buying a property to replace the one you live in now, which might apply if you’re looking to move into a new home but haven’t yet sold your current property

You’ll also be exempt from paying the higher stamp duty rate for buy to let homes if you’re a first-time buyer. But it’s worth bearing in mind that if you purchase a buy to let as your first property, you will still be required to pay the standard stamp duty rate, as well as Capital Gains Tax and Income Tax.

Is stamp duty still payable if the property is abroad?

If you own a property abroad and you plan to buy a property in the UK, you will still be required to pay additional stamp duty on your new purchase. This will apply regardless of the tax rules in the country where you own your existing property.

What if my partner already owns a property but I don’t?

Unless your partner is buying a second home to replace their main residence, the additional stamp duty rate will still apply.

The only way around this is if you were to buy the property in your sole name. But there are disadvantages that come along with this. For instance, you could be limited in how much you can borrow, compared to the loan you could secure with two incomes on a joint mortgage.

I’m getting divorced and buying a new home – do I need to pay more stamp duty?

This will depend on whether or not you have a property adjustment order in place. This is a legally binding court order that determines what will happen to a family home when a couple divorces.

If your property adjustment order dictates that your shared home will be transferred to your former spouse, you can buy another property without any extra stamp duty being applied.

But if there isn’t an adjustment order in place, you’ll still be required to pay the additional stamp duty rate if you decide to buy another property.

It is worth noting, though, that if your share of the marital home is sold within three years of you moving out, you could be entitled to claim a stamp duty rebate later on.

Claiming back stamp duty on a second home

If your former residence is sold within three years of you buying your second property, you could claim back the additional stamp duty you paid. This could also apply if you think there has been a mistake in how much stamp duty you’ve been charged.

To apply for a stamp duty refund, you’ll need to provide details to HMRC, including:

• The amount of stamp duty you’ve paid altogether
• The amount of stamp duty you’d like to claim back
• Your property addresses – for your previous main residence and the property you’ve paid additional stamp duty on

You can request your refund by filling in the SDLT repayment form on the GOV.UK website. This can either be submitted electronically, or printed off and sent by post.

If you’re in the process of buying a second home, or you’ve overpaid on stamp duty, our conveyancing solicitors can help you. They are experienced in this area, and will help you achieve the outcome you’re looking for.

To find out more, get in touch or start your enquiry online.

Note: First4Lawyers offers this information as guidance, not advice. Before taking any action, you should seek professional assistance tailored to your personal circumstances.