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Seller should pay stamp duty not the buyer

1 Comment 4th July 2010

Like most taxes, once a government gets them in place, they are reluctant to lose them. A trade off would be to transfer the payment from the buyer to the seller.

Inevitably at the point of purchasing a house, the buyers finances are stretched. The additional tax at this time is throttling the market partticularly for first time buyers. Especially at a time of high deposits.

Sellers who go on to become buyers remain tax neutral if both property values are equal. People trading up still pay tax at the lesser rate for the sold house, so do not need to find extra funds, again at a time of financial strain. Sellers moving out of the market or trading down, will pay the tax at the top of the chain. These people we would assume are  in a finacially strong position with cash in the bank. At this point it is less difficult to find the funds.

In the early days there  may  need to be some sort or staged transfer of responsibility from buyers to sellers to avoid situations where people are unfairly treated by having to pay twice, if they are leaving the market within a couple of years of buying.

 

Why does this matter?

This would help stimulate sales, especially for first time buyers, Instead of finding a lump of cash when they can least afford it, the seller will pick up the bill.

Inevitably, the builders of new properties will want to recoupe the duty by increasing the price of property, so the market values will be forced up. The buyer will however only pay a slightly larger deposit for his mortgage.

Overall it will stimulate the housing market.   

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One Response to Seller should pay stamp duty not the buyer

  1. robnorthlondon says:

    I think this is a good idea, since buyers have to borrow the extra money to begin with
    The seller would pay the duty from the sales price achieved and it woud act as kind of tax on increased land value, ie location value, which is affected by the taxpayers investment in the area on local amenities and infrastructure and transport etc.and not by the owner/vendor. It could be related to the average price of a similar home in the region/city.
    It might impede speculation too which drives up house prices to the detriment of all, particularly speculation from abroad.

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