Stamp Duty on Second Home

tunes

Hello, the deed for my parents' house abroad is in my name. This is my childhood home and it was transferred over to me when I was 18 as a gift. I receive no rental income from it as my parents still live in it. However, I've just realised that because of this I am not qualified as a first-time buyer in UK and much worse if I have to buy a property I would have to pay higher stamp duty under the new rules. This is not my main residence and I have been renting in UK since they day I've arrived here. Will I be seen as a home owner by the government when I decide to buy in UK? Thanks.

jbainbridge

SDLT only applies to purchases of land and property in England, Wales and Northern Ireland. A purchase of residential property located outside these areas will not pay SDLT, instead it may be liable for any property transactions tax in that jurisdiction.

https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

Can't see why you would - you will be subject to property taxes in the other country - not this one.

Not really sure why you couldn't be classed as a first time buyer - no one will ever know you own property abroad. How would they find out??

davidmcn

jbainbridge wrote: »

Can't see why you would - you will be subject to property taxes in the other country - not this one.

You've linked to the consultation rather than the guidance for the eventual legislation:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

Yes, you're subject to taxes in this country but the amount is determined by how many properties you own anywhere in the world:

3.15 An interest in a dwelling outside of England, Wales and Northern Ireland is to be counted for the purposes of Condition C

jbainbridge wrote: »

no one will ever know you own property abroad. How would they find out??

You've now strayed into guidance about tax evasion, which I hope wasn't what the OP had asked for!

marliepanda

jbainbridge wrote: »

Can't see why you would - you will be subject to property taxes in the other country - not this one.

Not really sure why you couldn't be classed as a first time buyer - no one will ever know you own property abroad. How would they find out??

Not true.
They do know, and second home stamp duty will apply.

jbainbridge

I'm wrong. Sorry everyone.

tunes

Thanks for the comments everyone. It looks like I will be liable for higher rate SDLT. However, in the consultation it also mentions;


"If at the end of the day of the transaction an individual purchaser owns two or more residential properties, whether the purchaser pays the higher rates or not will depend on whether they are replacing their main residence (further details on what is a main residence are given in section 2.8)."


"A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."


As my main residence has been in the UK for several years now, I might get lucky. Best option would be to consult a solicitor I guess to ensure I don't end up breaking any rules. It is not the most straightforward guidance unfortunately

ognum

tunes wrote: »

Thanks for the comments everyone. It looks like I will be liable for higher rate SDLT. However, in the consultation it also mentions;


"If at the end of the day of the transaction an individual purchaser owns two or more residential properties, whether the purchaser pays the higher rates or not will depend on whether they are replacing their main residence (further details on what is a main residence are given in section 2.8)."


"A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."


As my main residence has been in the UK for several years now, I might get lucky. Best option would be to consult a solicitor I guess to ensure I don't end up breaking any rules. It is not the most straightforward guidance unfortunately

You also might want to get guidance on the CGT position with regards to your parents house if/when they die. As you are a U.K. Resident paying U.K tax and you got the house for nothing the CGT could be very big when you come to sell. More legal advice needed.

davidmcn

tunes wrote: »

As my main residence has been in the UK for several years now, I might get lucky.

No you won't. You're not selling your main residence in the UK.

teddysmum

tunes wrote: »

"A owns both a main residence and a second home. She sells her main residence and purchases a new one. Although she has two properties at the end of the day of the transaction, she has replaced her main residence so the higher rates will not apply."


As my main residence has been in the UK for several years now, I might get lucky. Best option would be to consult a solicitor I guess to ensure I don't end up breaking any rules. It is not the most straightforward guidance unfortunately

This won't apply to you as the person in the example sold their main residence. They started with two properties and ended with two, but you would start with one and increase to two, which is what the extra duty penalises.


The only way out is to sell the house you own. The one you rent is irrelevant.