Like you, every property is unique, so we’ll just need a few details before we can make you an offer.
During the 2017 Autumn budget, there were calls for older people in the UK to be given a Stamp Duty break if they were planning on downsizing their property. The idea behind this is that many would take advantage of the break and free up larger homes for other families. While the Government showed that they didn’t support this move, it did serve as a reminder that if you are planning on selling your house to downsize and free up some equity, you still need to think about what taxes you’ll owe.
There are a variety of taxes involved with the exchange of property and individual circumstances, such as an inheritance that can complicate things even further. However, when simply downsizing your house, the typical taxes of Stamp Duty and Capital Gains Tax are fairly straight forward.
What is Stamp Duty?
Stamp Duty is typically paid on any property you buy. So, when you’re downsizing, you’re liable to pay a certain percent of your new homes overall value.
This tax only applies to properties over a certain amount and as the Stamp Duty rates currently stand, the following thresholds show just how much you can expect to pay:
Up to £125,000 – No Stamp Duty
£125,001 - £250,000 – 2%
£250,0001 to £925,000 – 5%
£925,001 to £1.5 million – 10%
Anything above £1.5 million – 12%
How does Capital Gains Tax work?
This tax is typically paid on any profit you make from the sale of a property. However, if you sell your main residence, then you do not pay any Capital Gains Tax.
This tax only applies to the sale of any extra properties that are not your home. For example, these could include inherited properties, buy-to-let properties or business premises. More detailed information can be found on our Capital Gains Tax blog.
Downsizing your home can have many practical benefits, from giving you a more manageable space to help cut down the cost of your monthly bills. Moving into a smaller property can also lead to a boost to your bank account, with older generations expected to release an average of £80,000 worth of equity upon selling.
Some may be reluctant to sell their house due to the worry that the various fees and the taxes that typically surround the selling process will leave them out of pocket. However, by understanding what you can expect to pay, you can be fully prepared to downsize and even make a bit of extra money. If you're looking to downsize and want a quick, easy sale, get your free quote today from We Buy Any House.