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Second Property Tax - Advice
StoneyRed
Posts: 2 Newbie
Hi all,
I currently own a property in a location that has hit a massive downturn in property prices, and if I sold today I would be sitting on a loss of approx 30% of the value of my property. I currently rent the property out and would like to continue to do so to ride the downturn in house prices out and hopefully recoup some of the paper losses back before selling again - or keep as an additional pension.
Problem I have is i'm looking to buy a second home (house rather than flat) and would incur scotland's additional dwelling tax (similar to englands 2nd property land tax). I've spoken to two solicitors with conflicting opinions, so was wondering what anyone here would think or recommend to do. One solicitor suggested I could pay the mortgage off on my first property (doable) and gift it to a parent, then buy the "2nd property" as my only property, and at a moment in time in the future gift the original "1st" property back. Under gifting tax rules between family there is no tax issues, and the legal costs of doing so would be much less than the additional dwelling tax (£10-15k).
The 2nd solicitor I spoke to suggested I was actively taking steps to avoid tax, and therefore, would be seen as breaking the law and could incur penalties if investigated.
just curious if anyone else has been in this position, and what they have proceeded with.
Cheers
StoneyRed
I currently own a property in a location that has hit a massive downturn in property prices, and if I sold today I would be sitting on a loss of approx 30% of the value of my property. I currently rent the property out and would like to continue to do so to ride the downturn in house prices out and hopefully recoup some of the paper losses back before selling again - or keep as an additional pension.
Problem I have is i'm looking to buy a second home (house rather than flat) and would incur scotland's additional dwelling tax (similar to englands 2nd property land tax). I've spoken to two solicitors with conflicting opinions, so was wondering what anyone here would think or recommend to do. One solicitor suggested I could pay the mortgage off on my first property (doable) and gift it to a parent, then buy the "2nd property" as my only property, and at a moment in time in the future gift the original "1st" property back. Under gifting tax rules between family there is no tax issues, and the legal costs of doing so would be much less than the additional dwelling tax (£10-15k).
The 2nd solicitor I spoke to suggested I was actively taking steps to avoid tax, and therefore, would be seen as breaking the law and could incur penalties if investigated.
just curious if anyone else has been in this position, and what they have proceeded with.
Cheers
StoneyRed
0
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