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There are five main types of tax that landlords have to pay:
Stamp duty is usually the first tax that landlords have to deal with. The Stamp Duty rate depends on the property purchase price:
|Property purchase price||Stamp duty|
|up to £125,000||0%|
|£125,001 – £250,000||2%|
|£250,001 – £925,000||5%|
|£925,001 – £1,500,000||10%|
You pay an additional 3% in Stamp Duty if you’re purchasing:
Want to work out what you owe in Stamp Duty? Check out our Stamp Duty calculator 👇
The Stamp Duty you pay is calculated based on the price of the property you’re buying.
In your case, £500,000.
As you’re a first-time buyer, you don’t pay Stamp Duty Land Tax on the first £300,000 of your purchase.
You pay 5% Stamp Duty on amount up to £500,000. For you, this is £10,000.
Your Stamp Duty Land Tax total is £10,000.
To calculate it, add the rent (minus expenses) to your other income sources: this determines your tax band.
|up to £12,570||0%||Personal allowance|
|£12,571 to £50,270||20%||Basic rate|
|£50,271 to £125,140||40%||Higher rate|
|over £125,141||45%||Additional rate|
Check out our guide to paying tax on rental income for more information.
This visual helps helps break it down 👇
You need to pay Class 2 National Insurance on your rental income if:
You need to pay Class 4 National Insurance on your rental income if you make more than £12,570 per year.
You need to pay CGT when you sell property for a profit:
|Overall annual income||CGT rate (applies to your entire CGT profit)|
You don’t pay CGT for:
Check out our CGT calculator for more details.
How you pay CGT on property:
|Who owns the estate||Estate value||Inheritance tax|
|Couple / Civil partnership||under £650,000||0%|
|Couple / Civil partnership||over £325,001||40%|
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