Scotland politics

Who will be the winners and losers of the new Scottish property tax system?

John Swinney to present his budget Image copyright Getty Images

The Scottish Finance Secretary John Swinney has outlined his budget plan for 2015-16 - and he's shaking up the housing market.

With a new property transaction tax replacing stamp duty, Mr Swinney claims 90% of taxpayers will be "better or no worse off" under the new regime.

To provide context to that 90% claim, the average house price in Scotland is £162,122.

So, here we look at who will be the winners and losers once the system changes.....

Buying a property costing up to £135,000

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Currently any property up to £125,000 does not involve any stamp duty payment.

Stamp duty being a lump-sum tax that anyone buying a property costing more than a certain amount is required to pay.

As of April 2015, that tax-free figure will rise to £135,000 for homebuyers in Scotland.

If you were to buy a house today between those two figures, you would need to pay 1% stamp duty.

So, a £130,000 purchase now, for example, would require a duty payment of £1,300.

However, a £130,000 purchase next April won't require any tax payment.

Mr Swinney says this means "5,000 more transactions will be taken out of tax, supporting first-time buyers and those buying properties in the affordable market."

Verdict: Winners

Buying a property costing between £135,001 and £250,000

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A marginal tax of 2% will apply to properties within this price bracket.

Therefore, for example, a house bought at £200,000 when these new tax rates arrive, would require a payment of £1,300 - that's 2% of £65,000 (Basically the difference between £200,000 and £135,000).

Buy a house now at £200,000 and you're needing to pay 1% stamp duty, which would be £2,000.

So, a house bought at £136,000 in April 2015 would require a one-off payment of £20.

A house bought at £136,000 now would require a one-off payment of £1,360.

Verdict: Winners

Buying a property costing between £251,001 and £1,000,000

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This is where it starts to get tricky. There's a marginal tax of 10% across this entire price range, and there's a tipping point for when it doesn't work in your favour.

That tipping point is £324,300.

A property bought at £300,000 in 2015 would mean a £7,300 charge [0% of £135,000; 2% of £115,000 and 10% of £50,000]. With stamp duty for a house at this price currently at 3%, the stamp duty payment would be £9,000.

At £325,000, that's £9,800 to be paid in 2015, whereas now you'd pay £9,750.

£700,000 would require a tax payment of £47,300, whereas stamp duty would be £21,000.

Verdict: Winner up until £325,000. Loser for anything above.

Buying a property costing more than £1,000,000

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If you're in the fortunate position that you can purchase a property costing more than £1m, you're also in the unfortunate position of having to pay more tax than you would pay stamp duty.

The stamp duty for a £1m to £2m house is at 5%, with anything above £2m at 7%.

For any purchase over £1m from April 2015, there will be an additional 12% tax rate.

So, for example, a £1.5m property bought next spring would cost £137,300 in tax. Bought now, stamp duty would be at £75,000.

A £3m mansion bought in April 2015 would bring a tax charge of £317,300. Purchase that now and you'd be paying £210,000.

Verdict: Losers

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