Avoiding second home Tax

Dave210782

Dear readers. I am stuck with a dilemma? I have been wrapping my brains round finding a solution... Can I buy second home and avoid paying this stamp duty/land/home tax, whatever you want to call it. The home I rent out is in (England) only worth about 70k and we want to buy a family home in Scotland as our main home.
Do all rules still apply if one home is.

1:Scottish and one in English? I know rules are bit different.?

2:Can I sign the rented house in trust to children or anyone else for that matter?

3:i have read somewere if I only own part of the house no more than 40k worth or own (49%) of my home and say put the rest in an other persons name i.e (51%)- then I no longer have a (main asset) as first home? That's how some of the legal guys are reading it? Is this true.? A Gray area not tested in court or what.?

4. Could I sign over a house to say my mother who "doest own a home." then could "she" leave the house in trust to our kids.? would this avoid second home stamp duty. ?

My spouse is first time buyer and i belive we would lose the government 25% grant on first time buyers LISA.(which is set up.)If she was given any sort of share in my rented house.

(There must be a way if not just for the rich
Any professional knowledgeable advice to these questions would be greatly appreciated.
:money:

anselld

5. Sell it. That is what the legislation is aimed to encourage. And they didn't write the legislation with a load of trivial loopholes for people wishing to avoid the tax.

Pixie5740

Dave210782 wrote: »

Dear readers. I am stuck with a dilemma? I have been wrapping my brains round finding a solution... Can I buy second home and avoid paying this stamp duty/land/home tax, whatever you want to call it. The home I rent out is in (England) only worth about 70k and we want to buy a family home in Scotland as our main home.
Do all rules still apply if one home is.

1:Scottish and one in English? I know rules are bit different.?

2:Can I sign the rented house in trust to children or anyone else for that matter?

3:i have read somewere if I only own part of the house no more than 40k worth or own (49%) of my home and say put the rest in an other persons name i.e (51%)- then I no longer have a (main asset) as first home? That's how some of the legal guys are reading it? Is this true.? A Gray area not tested in court or what.?

4. Could I sign over a house to say my mother who "doest own a home." then could "she" leave the house in trust to our kids.? would this avoid second home stamp duty. ?

My spouse is first time buyer and i belive we would lose the government 25% grant on first time buyers LISA.(which is set up.)If she was given any sort of share in my rented house.

(There must be a way if not just for the rich
Any professional knowledgeable advice to these questions would be greatly appreciated.
:money:

Have you read any of the rules regarding the Additional Dwelling Supplement on LBTT?

https://www.revenue.scot/land-buildings-transaction-tax/guidance/lbtt-legislation-guidance/lbtt10001-lbtt-additional-dwelling

Your spouse will still be eligible for the LISA bonus.

AdrianC

Dave210782 wrote: »

There must be a way if not just for the rich

Many people's definition of "the rich" would include people who own more than one house, y'know.

Dave210782

Reply to : anselld. Thanks for your reply, but this site is about saving money and although I appreciate what your saying the legislation does exempt landlords with 15 or more propertys, so I find it’s just another tax to penalise accidental landlords. I wouldn’t really make any profit on selling my ex council home, and I would raver leave the asset for my two children when house prices will be near impossible for them to get onto property ladder in the future. So as you can see there is a bigger picture to consider in all of this. Thanks again for your input.

AdrianC

Dave210782 wrote: »

this site is about saving money

There is a difference between "saving money" and "avoiding the tax you owe because of your life decisions".

the legislation does exempt landlords with 15 or more propertys

No, it doesn't. It was rumoured that it might, when it was first announced three years ago, but that never happened.

so I find it’s just another tax to penalise accidental landlords.

No such thing.

Nobody - and I mean NOBODY - ever woke up and looked surprised to find they'd signed a tenancy agreement on a house they didn't know they owned. Every single landlord made a deliberate decision to start in the residential property letting business. Nobody ever says they're an accidental window cleaner, or an accidental builder, or an accidental IT consultant, or run any other small business accidentally.

The term is just an excuse to try to deny the legal responsibilities inherent in starting a residential property letting business.

But, yes, it is a tax intended to quell the rise in BtL. That's precisely what it is. It was clearly stated to be such when it was introduced in the 2015 budget. And?

I wouldn’t really make any profit on selling my ex council home

Oh, dear, what a pity.

Are you forgetting the RtB discount in that, p'raps?

and I would raver leave the asset for my two children when house prices will be near impossible for them to get onto property ladder in the future. So as you can see there is a bigger picture to consider in all of this.

There's a certain irony there, y'know.

davidmcn

Dave210782 wrote: »

I find it’s just another tax to penalise accidental landlords. I wouldn’t really make any profit on selling my ex council home

You shouldn't be disappointed about that - if you're merely an accidental landlord then you never went into it with the aim of making a profit, did you?

I would rather leave the asset for my two children when house prices will be near impossible for them to get onto property ladder in the future. So as you can see there is a bigger picture to consider in all of this.

The bigger picture is surely that the tax is likely to improve matters for your children by increasing the supply of property for owner-occupiers.

Keep_pedalling

Setting up a trust for your children is going to be a dam site more expensive than the additional tax.

Giving your mother the property would work, you just have to hope she never has to sell it to pay for care costs. Although it would be good for her to have some choice about where she got her care from.

You also might have a capital gain liability with either of the above.

Just buy your new house and sell the rented one.

Pixie5740

AdrianC wrote: »

There is a difference between "saving money" and "avoiding the tax you owe because of your life decisions".

I don't think there is a difference. Tax avoidance is a perfectly legal way of saving money.

Pixie5740

Dave210782 wrote: »

Reply to : anselld. Thanks for your reply, but this site is about saving money and although I appreciate what your saying the legislation does exempt landlords with 15 or more propertys, so I find it’s just another tax to penalise accidental landlords. I wouldn’t really make any profit on selling my ex council home, and I would raver leave the asset for my two children when house prices will be near impossible for them to get onto property ladder in the future. So as you can see there is a bigger picture to consider in all of this. Thanks again for your input.

Does the ADS LBTT legislation exempt landlords with 15+ properties?

There's nothing accidental in what you are planning and I agree with Adrian C, there's a certain irony in worrying about future property prices for your children whilst owning more properties than you need. There are other ways you can help your children get on the property ladder in the future than hanging on to your current home. Would it even wipe its own face as a rental property?

AdrianC

My bad - I should have said "evading". Avoiding is, of course, perfectly legal and laudable.

I avoided about £18 in tax last night by not smoking a packet of 20 cigs and drinking a bottle of whisky.
However, if I'd smoked black market cigs and drunk black market whisky, I'd have evaded that tax.