The introduction of the Land and Buildings Transaction Tax to replace stamp duty in Scotland is having an “eye watering” impact on the market, according to a prominent estate agency.
Perthshire-based Bell Ingram says one buyer had to pay £130,000 in property taxes thanks to the arrival of LBTT in Scotland in April 2015.
At the time, LBTT was described as being designed to make the tax charge more proportionate to the actual price of the property.
“We recently sold a property at £1.15m and the LBTT was £96,350, compared to stamp duty in the rest of the UK at only £58,750 - that’s a £37,600 difference” explains Carl Warden of Bell Ingram’s Perth office.
“This transaction also attracted an additional three per cent second home tax of £34,500, which was a grand total of an eye watering £130,850 in purchase taxes. Transactions attracting this level of tax are making people do one of two things - either not move at all, or negotiate hard on the asking price based on the vendor reducing their price by the level of tax due” he says.
In more rural areas of Scotland, the tax has had a more limited impact with the majority of homes being of lower value and so paying less LBTT than stamp duty, unless they are second homes.