The threshold for Land Transaction Tax in Wales is to increase to £225,000, Finance Minister Rebecca Evans has announced.
At present homebuyers pay the tax on properties that cost over £180,000 but the new threshold will come into force from 10th October.
The Government also said that there will also be a small increase in the rate of Land Transaction Tax for homes that cost more than £345,000.
The £550 increase will apply to around 15% of property transactions in Wales.
All other elements of Land Transaction Tax will remain unchanged, meaning there are no tax reductions provided to those purchasing second homes in Wales, unlike with stamp duty land tax in England.
Evans said: “This is a change tailored to the unique needs of the housing market in Wales and contributes to our wider vision of a fairer tax system.
“61% of homebuyers will not pay tax on their purchase. These changes will get support to people who need it and help with the impact of rising interest rates.
“We also know that helping people at the lower end of the market will have a particular benefit for first-time buyers.
“We help people buy their first home in a number of different ways, including shared ownership and Help to Buy schemes, and I am pleased to be able to extend that support through these changes to Land Transaction Tax.”
The move has been welcomed by trade body Propertymark but it added that an incentive for people to downsize would also be in order.
Nathan Emerson, CEO of Propertymark, said: “Wales has seen large growth in house prices due to spikes in demand, so it is, therefore, logical that the tax threshold would be changed in line with current property values.
“When LTT incentives are created, they are largely aimed at first time buyers, but incentives for downsizers or last-time movers would encourage movement in the latter part of the market, which when blocked stops movement further down for second steppers and first-time buyers, causing stagnation as buyers have nothing to move on to.”
