Taxes and Bills to Consider When Purchasing a House
When purchasing a new home, there is a range of factors to consider. Besides the price of the home and the location, you also need to think about the taxes and other bills associated with homeownership. This blog post will discuss some of the key taxes and bills you should be aware of when purchasing a house. Keep in mind that your individual situation may vary, so please consult a tax professional or other financial expert for more information.
Taxes To Be Aware Of When Purchasing a House
When you buy a property in the UK, there are a number of taxes that you may be liable for. The most common of these is stamp duty land tax (SDLT), which is a tax charged on the purchase price of a property.
Other taxes that you may have to pay include council tax, capital gains tax and inheritance tax. Each of these taxes has different rules and thresholds, so it's important to seek professional advice to make sure you are aware of all the potential costs involved in buying a property.
Stamp duty land tax is calculated as a percentage of the purchase price of the property. The amount of stamp duty you will have to pay depends on the value of the property, with higher rates applying to more expensive properties.
- Council tax is a local tax that is charged on all properties. The amount of council tax you will have to pay depends on the value of your property and where it is located.
- Capital gains tax is a tax that is payable on any profit you make when you sell a property. The rate of capital gains tax you will have to pay depends on your marginal rate of income tax.
- Inheritance tax is a tax that is payable on the value of your estate when you die. The amount of inheritance tax you will have to pay depends on the value of your estate and who inherits it.
If you’ve been searching for a new home, you’ve probably heard of Capital Gains Tax. Capital Gains Tax is for the sellers of the house. If you’re a seller, you may not have to pay Capital Gains Tax if you meet all of the following criteria:
- (Including the building) The grounds are smaller than 5,000 square feet.
- The owner has not let part of it out to other people or used it as part of a business.
- This house has been your main home and you’ve lived in it all the time you’ve owned it.
These taxes can add to the cost of buying a property. Make sure you factor in the cost of these taxes when budgeting for your purchase.
Bills To Be Aware Of when Purchasing a House
Before you purchase a house, you need to understand the bills you have to pay to protect or keep your house running. Keep in mind that depending on your situation, you may not need these.
There are a number of bills you'll need to take into account once you purchase a property. Depending on the type of home you buy, the bills can vary quite significantly.
Here's a look at some of the main types of bills you'll need to budget for:
- Water Bills
You'll need to pay water rates regardless of whether you own or rent a property. The amount you'll be charged will depend on the size of your home and the water company that supplies your property. It also depends on whether you have a water meter or are unmetered. If you don’t have a water meter, then you just pay a fixed rate. If you have a water meter, then you will be charged for much water you use.
- Gas and Electricity Bills
Gas and electricity bills are usually one of the biggest expenses for homeowners. The amount you'll need to pay will depend on a number of factors, including the size of your home, how energy efficient it is, and how much gas and electricity you use.
- TV License / Broadband
You'll need to pay a TV license if you watch or record live TV broadcasts. The amount you'll need to pay will depend on the type of TV service you have.
Broadband bills are typically monthly. This means that you'll be charged a fixed amount each month for your broadband service. The price you pay will depend on the type of broadband package you have, and how fast your connection is.
Some broadband providers will also offer discounts if you pay for your broadband upfront, or if you sign up for a longer contract. So, it's worth shopping around to see what deals are available.
- Home Insurance
It's important to have adequate home insurance in place when you own a property. Although house insurance isn’t a legal requirement, it is beneficial to the homeowner if their house and belongings are damaged. Building insurance covers the cost of repairing damage to the property’s structure. This means if a natural occurrence was to happen like a tree falling on your house or a person crashing a car into your house, the building insurance would pay for the structural damage.
The cost of your premium will depend on a number of factors, including the value of your home, its location, and the level of cover you require.
Contents insurance isn’t compulsory however, it is recommended as it could help you one day. Contents insurance covers the cost of your belongings if they are stolen, damaged, or destroyed.
- Mortgage Interest
If you have a mortgage on your property, you'll need to budget for mortgage interest payments. The amount you'll need to pay will depend on the size of your mortgage and the interest rate.
- Maintenance and Repairs
As a homeowner, you'll be responsible for maintaining and repairing your property. The cost of this will vary depending on the type of work that needs to be done.
Now that you know about some of the bills and taxes associated with homeownership, you can be prepared for them when they come up.
Contact Hadleigh Estate Agents for Properties to Buy & Rent
If you’re looking for a property to buy or rent in Birmingham, please get in touch with our property experts at Hadleigh Estate Agents. We are market leaders in the Harborne and Edgbaston areas.
Our friendly, experienced, and qualified team of estate and letting agents like to take the time to understand your needs to find out exactly what you’re looking for in a purchase or rent property.