JOHN Swinney has eased the burden on middle class home buyers after announcing a £60million tax cut on property transactions.

The Finance Secretary bowed to pressure from the Tories and agreed to pass on George Osborne's generous Stamp Duty cuts, introduced last month, to Scots home buyers.

His Land and Buildings Transaction Tax (LBTT) is due to replace Stamp Duty in Scotland from April 1.

Mr Swinney unveiled the rates in October but yesterday announced sweeping revisions before they had even come into force.

The biggest difference will be felt by those buying homes priced around the £250,000 to £350,000 mark.

Under his new plans, the tax charged on buying a £300,000 property will be £4600, compared with £7300 announced three months ago.

The figure is below the Stamp Duty of £5000 levied on a £300,000 home.

Mr Swinney unveiled the new rates in a Holyrood statement as MSPs began the process of approving the Budget for the coming financial year.

He stressed he wanted LBTT - the first national tax raised in Scotland for 300 years - to be "revenue neutral," raising the same amount as the UK-wide levy it will replace.

He told MSPs: "One consequence of the Chancellor's announcement in December is that the amount of revenue I am required to raise to meet the principle of revenue neutrality is lower than anticipated."

Despite the cuts, property experts warned LBTT would drive down house prices at the upper end of the market and might cause sales to stagnate.

The Scots Tories - who branded Mr Swinney's original proposals a "tax on aspiration" - welcomed the U-turn.

Under the new LBTT rates, anyone buying a home for £330,000 or above will pay more from April 1.

Those buying a £500,000 home will pay £23,350, substantially higher than the Stamp Duty of £15,000 that will remain in force in England.

The gulf becomes even wider for £1million properties, which will carry an LBTT of £78,350 levy compared with Stamp Duty of £43,750.

Mr Swinney increased LBTT on properties over £945,000 compared with his original plans.

However, in a move designed to help first time buyers, he also raised the threshold at which LBTT will be charged from £135,000 to £145,000 taking an extra 5000 transactions out of the tax altogether.

Compared with Stamp Duty, which is payable on homes worth £125,000, 20,000 Scots 10,000 Scots will be taken out of purchase tax.

Overall, 90 per of Scots buyers will be better off or no worse off under LBTT than Stamp Duty when the new tax starts in April.

The tax on home purchases is expected to raise £235million, £60million less than with the original rates.

Scotland's budget is to be cut by £64million less than expected, as a result of Mr Osborne's Stamp Duty changes, when Holyrood takes charge of property and landfill taxes.

Mr Swinney told MSPs: "In exercising its first judgements on national taxes, this Government has put fairness, equity and the ability to pay at the heart of what it has done."

Scots Tory finance spokesman Gavin Brown said: "These changes would not have happened without pressure from the Scottish Conservatives and changes made by George Osborne."

Scottish Labour's finance spokeswoman, Jackie Baillie, said: "Back in 2007 we used to think that John Swinney accepted Tory amendments to his budget out of necessity.

"Now we know that he does it out of choice."

The property industry welcomed the tax cuts but voiced concerns about LBTT's possible impact on the housing market.

Philip Hogg, chief executive of Homes for Scotland, which represents house builders, said: "Additional support at market entry level is welcome, but we need a healthy, functioning market for all price brackets.

"It therefore remains to be seen whether the sharp 10 per cent increase for purchases above £325,000 could still prove too punitive on growing families and aspirational movers, leading them to stay put and others unable to progress up the housing ladder."

John Bound, of property consultants CKD Galbraith, said: "Overall we estimate that there will be a slight devaluation in the property market and we expect that the new rates at the higher end of the market may well have an impact on house prices as purchasers and vendors factor the new rates into their price calculations."

Sarah Speirs, director of surveyors' body RICS Scotland, said: "The amended bands should reduce distortion and ensure those at the top end of the market contribute equitably, however, we will continue to monitor the upper end of the market as there is potential for it to stagnate under LBTT, and if we want a functioning market, it has to work at all levels."

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