Playing the property game can be a risky business. Unless you are confident in your ability to buy and sell at the right time and have the confidence to manage all of the risks and costs involved then you should avoid it. Some people like to play the property game because if you buy a home, move into it, do it up and then sell at the right time you can make a good tax-free profit from the sale. You have no tax to pay on the profit because it is your primary residence. If it were a second property and not your primary residence, then there would be tax to pay.
But, when playing the property game you really need to be super sharp on all the associated and hidden costs of any property purchase and sale. When buying the property initially you will have to pay legal fees, property condition survey costs, but the largest cost will undoubtedly be stamp duty (officially known as Stamp Duty Land Tax or SDLT) which is a significant tax levy that you need to pay the government for any property purchase made. Prior to December 2014 this was simply a percentage of the total house purchase cost, but new legislation by the government mean that rates are now paid only on the part of the property price within each tax band. It is fairly complicated, but once you work it out its a hefty tax particularly at the top end of the market:
When you’re selling a home, your biggest cost is your estate agent’s fees. They will charge a percentage of the sale price of your home and this is often between one and three percent depending on the agent and value of the house. There are also legal costs and furniture removal costs but these aren’t large in the big scheme of things. Please don’t forget about VAT on all agent’s and legal fees. This often catches a lot of people out.