SDLT - foreign property valued below £40k

JOJ

Hi,

I'd be grateful for any advice on our situation:

We recently moved back to the UK from Spain, and are starting again on the housing ladder. We're blessed to have received an inheritance that may just give us enough of a deposit to get a mortgage and buy something.

We own a tumbledown property in Spain, in a difficult area, within a still pretty slow market. If it were possible to sell it, we'd lose 1,000's, as we bought near the peak of the Spanish 'boom' in 2004. So, not planning to do that. The state it's in, and the location, also make it impossible to rent out.

We previously owned a UK property, so are obviously not first time buyers.

The current SDLT rates are eye-watering for multiple property owners, even though we are buying to live in not to let.

My thought is this: it's completely reasonable to expect that the Spanish house is worth less than the Govt's £40,000 value limit for SDLT, which would mean we could buy in the UK without declaring ownership of it (I think).

- Does anyone know what happens in practise with declaring / providing valuation evidence etc through the UK conveyancing process?
- Is it entirely down to HMRC to query the buyer's tax declaration?
- Is it common that HMRC would ask for / seek valuation of a foreign property, and how might they go about that?

Many thanks!

Jon

sheramber

The value of the property in Spain is nor relevant.

The £40,000 value applies to the property you buy, not the one you already own.

00ec25

sheramber wrote: »

The value of the property in Spain is nor relevant.

The £40,000 value applies to the property you buy, not the one you already own.

wrong

learn about Condition C
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09780

00ec25

JOJ wrote: »

- Does anyone know what happens in practise with declaring / providing valuation evidence etc through the UK conveyancing process?
- Is it entirely down to HMRC to query the buyer's tax declaration?
- Is it common that HMRC would ask for / seek valuation of a foreign property, and how might they go about that?

Many thanks!

Jon

you sign a SDLT return which says you are telling the truth
the chances of HMRC picking your actual declaration for a follow inspection are slim to non existent - if they do, and you lied, I am sure you can work out the consequences.
if you lie and don't get picked for random review, live with the knowledge something may cause HMRC to check on you later ... or not.

JOJ

Thanks both for replies, - appreciated.


Yes, the 40k threshold certainly applies to existing properties.


We're not considering covering anything up, simply that the Spanish house is genuinely low value. It's hard to put a value on it in such a different and tricky market there, and the question is about how the declaration process may work based on anyone's similar experience, - do we declare it at (say) equivalent of £30,000 based on the opinion of two or three Spanish estate agents, or do we declare the same then it's entirely down to HMRC to query and ask for evidence if thay choose to? etc.


I'll get hold of a copy of standard SDLT form, and see what that tells me, and ask a conveyancing solicitor.


JOJ

SDLT_Geek

If you own the Spanish property in equal shares then it appears that HMRC accept that it does not count against either of you if the share that each of you has is worth less than £40,000. So the margin might be bigger than you think.

JOJ

Thanks SDLT Geek. Do you have a link to HMRC guidance on that point? I haven't yet found where that applies.

SDLT_Geek

The HMRC example here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09780 whilst for friends co-owning a property rather than a married couple, is helpful. Do not believe anyone who tells you that a married couple are treated as a single unit for these purposes: it is over-simplistic and can give wrong answers.

See the Adam and Eve example linked from here: https://www.zoopla.co.uk/discover/buying/3-stamp-duty-rules-hmrc-s-updated-guidance-debunked/

JOJ

Again, thank you. Useful to have this guidance.