Property tax cuts boost for first-time buyers
INDUSTRY experts have welcomed proposed cuts to tax rates on Scottish property purchases, claiming the move will further assist first-time buyers and boost activity at the lower end of the market.
Finance Secretary John Swinney announced revisions to his Land and Buildings Transaction Tax (LBTT) rates – which will replace stamp duty for homebuyers in Scotland from April – as the majority of MSPs backed his spending plans for the year ahead.
The changes mean nobody will pay tax on properties costing less than £145,000, but those buying the most expensive homes will pay more.
The Finance Secretary first revealed details of the rates for the new LBTT when he set out his draft 2015/16 Budget in October. But after Chancellor George Osborne made changes to stamp duty some two months later, Mr Swinney has now announced a series of alterations to LBTT before it has even come into force.
These will mean residential properties worth up to £145,000 will not attract any tax, up from the proposed £135,000.
For sales between £145,000 and £250,000, a tax rate of two per cent will be applied, with the introduction of a new rate of five per cent between £250,000 and £325,000.
Sarah Speirs, director of the Royal Institution of Chartered Surveyors Scotland, welcomed the move but was cautious about the implications for the top end of the market.
She said: “The amended bands should reduce distortion and ensure those at the top end of the market contribute equitably, however we will continue to monitor the upper end of the market as there is potential for it to stagnate under LBTT, and if we want a functioning market, it has to work at all levels.”
Mr Swinney had previously planned a tax rate of ten per cent on homes sold between £250,000 and £1 million – prompting fears those buying family homes could be hit.
But now the ten per cent rate will be applied to properties valued between £325,000 and £750,000.
The top rate of 12 per cent – which was previously going to apply to houses worth more than £1 million – will now take effect from £750,000.
Mr Swinney said the Government was putting “fairness, equality and the ability to pay” at the centre of its decisions.
Labour described the revisions as a “U-turn”, while the Conservatives gave them a partial welcome
Andy Wightman, a Scottish land reform expert and campaigner, said: “Cutting the LBTT or stamp duty rate doesn’t help anyone. It merely pushes house prices up.
“I don’t understand why the SNP is following George Osborne, but tinkering is no substitute for abolishing this bad tax in its entirety and raising the revenue instead by a well-designed system of annual property taxation.”
MSPs backed the general principles of the Budget (Scotland) (no 4) Bill by 66 votes to 0 with 55 abstentions.