New tax relief to help people buy their first home
First-time buyers will be helped to purchase their first home through a new tax relief which came into force at the weekend.
Around 80% of first-time buyers will pay no tax as the Land and Buildings Transaction Tax (LBTT) First Time Buyer relief comes into effect. The change sees the zero-rated LBTT threshold raised to £175,000 for first-time buyers. Those purchasing property at a higher value will have their tax reduced by £600, meaning that around 12,000 first-time buyers will benefit each year.
Minister designate for public finance and digital economy, Kate Forbes, said: “From now, around 80% of first-time buyers will pay no LBTT, helping thousands of people across the country buy their first home.
“Our progressive approach to the setting of LBTT rates and bands prioritises support for first-time buyers and helps others as they move through the market.
“Alongside our shared equity schemes, the introduction of this new relief provides further support to first-time buyers and delivers on the commitment made by the Scottish Government as part of the 2018/19 Scottish budget.”
The commitment to introduce a first-time buyer LBTT relief was announced in the 18/19 draft budget. Following consultation, the relief has been introduced by way of the Land and Buildings Transaction Tax (First-Time Buyer Relief) (Scotland) Order 2018.
The relief will have the effect of raising the zero tax LBTT threshold for first-time buyers from £145,000 to £175,000. First-time buyers buying a property above £175,000 will also benefit on the portion of the price below the threshold. This equates to a £600 reduction in tax.
The Scottish Fiscal Commission has independently estimated that this policy will benefit around 12,000 first-time buyers each year. Over three quarters (76%) of those supported into homeownership by the Help to Buy (Scotland) and the LIFT (Low-Cost Initiative for First Time Buyers) schemes are young people aged 35 and under. Recent figures show that the number of young people aged 30 and under supported via Help to Buy (Scotland) increased from 50% to 55% in 2016/17.