F you want to avoid paying stamp duty* the answer could be to build your own home rather than heading for the nearest estate agency.
Soaring property prices have resulted in the majority of homebuyers having to pay out thousands of pounds in stamp duty. And with the Pre-Budget Report looming comes the threat of further tax rises.
As if that’s not bad enough, recent changes to stamp duty legislation now mean anyone buying a home must complete a self-assessment tax form and pay any tax due within 30 days of completion.
The move has made it harder for homebuyers to reduce the amount of duty by negotiating with the vendor to pay over the odds for fixtures and fittings to keep the official value of the transaction below a stamp duty threshold.
Currently stamp duty is levied at 1% on property sales from £60,000 to £250,000, 3% for £250,000 to £500,000, and 4% for properties selling for more than £500,000.
Yet if you build your own home you could save yourself thousands of pounds in stamp duty. This is because you pay duty on the cost of the land and then only on plots that cost more than £60,000. There is no stamp duty on the cost of the building work or even the value of the property once it has been completed.
This means if you buy a plot for £155,000, and the final value of the property is £525,000, you would pay stamp duty of £1,500 (1% of the plot cost).
But someone buying a property worth £525,000 would have to pay stamp duty of £21,000 (4% of £525,000).
Anna Guthrie at Norwich & Peterborough building society said: ‘It is one of the most understated benefits of self build that stamp duty is paid only on the price of the plot of land, no matter what the final value of the build.’
According to self-build specialists, Buildstore, self built homes are worth on..