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What new property tax rates mean for Scottish agents

For house buyers in Scotland, John Swinney's new tax rates on Scottish property prices are likely to make little difference to the buying and selling of homes north of the border. People need a roof over their head and will move up and down the ladder regardless to achieve this basic reality.

But as the average house price in Scotland is £160,000 - significantly rising to £232,000 in Edinburgh - the Land and Buildings Transaction Tax (LBTT), which is replacing Stamp Duty in April, is good news for the majority of buyers as it will save them money.

Under the new proposals for Scottish property purchases, there will be no tax paid up to £145,000 which benefits first time buyers. Homes between £145,000 and £250,000 will have a 2% tax rate which will rise to 5% for properties between £250,000 and £325,000. Those between £325,000 and £750,000 will pay 10%, increasing to a 12% tax on those over £750,000.

While the news has generally been welcomed, there has been criticism from those at the higher end of the scale. LBTT on a £500,000 property will rise to £23,350, compared with a stamp duty of £15,000 and tax on a £1 million home will be an astonishing £78,350, compared with £43,750 in England.

The fear from some estate agents is this sudden hike will cause the luxury end of the market to collapse. This is just speculation as the market is recovering from the crash seven years ago and in comparison with London, high end Scottish properties offer value for money.

In my view, LBTT is a fairer and more modern way to tax compared to the old stamp duty. It is more progressive as opposed to lump sum changes which would have worked many years ago before prices sky rocketed.

Previously, many buyers would hunt for a home less than £250,000 as they would pay £5000 less in tax if they purchased one at £250,001, which is madness.

We have to move with the times and it's about time there a tax system in place which is reflective of today's property market.

*Graham White is the Head of Sales at Braemore, a lettings and estate agency in Edinburgh


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