Tax on a Second Property

newbieni

Hi All,

I have just purchased my new home; however, my existing home has not yet sold. I have had to pay £14k tax due to the new home being considered a second home, which will be refunded if I sell my old home within three years.

However, I have had an offer to rent my old property for approximately six months. If I rent it out and still sell my house within the three years will I get the second home tax refunded or does the renting negate this?

Thanks.

poseidon1

Renting does not negate ability to get the refund. Just avoid the short tenancy turning into a long one and interfers with your ability to sell within the time limit.

As a rookie landlord you might want to look into the traps and pitfalls of that role , as well as your new obligation to complete a self assessment tax return in future.

If property mortgaged, tax compliance now complicated with regard to how debt interest is treated.

Jeremy535897

newbieni said:

Hi All,

I have just purchased my new home; however, my existing home has not yet sold. I have had to pay £14k tax due to the new home being considered a second home, which will be refunded if I sell my old home within three years.

However, I have had an offer to rent my old property for approximately six months. If I rent it out and still sell my house within the three years will I get the second home tax refunded or does the renting negate this?

Thanks.

Once the Renters Rights Bill becomes law, you won't normally be able to let for a defined period.

newbieni

Jeremy535897 said:

newbieni said:

Hi All,

I have just purchased my new home; however, my existing home has not yet sold. I have had to pay £14k tax due to the new home being considered a second home, which will be refunded if I sell my old home within three years.

However, I have had an offer to rent my old property for approximately six months. If I rent it out and still sell my house within the three years will I get the second home tax refunded or does the renting negate this?

Thanks.

Once the Renters Rights Bill becomes law, you won't normally be able to let for a defined period.

Does that apply to Northern Ireland?

Yorkie1

newbieni said:

Jeremy535897 said:

newbieni said:

Hi All,

I have just purchased my new home; however, my existing home has not yet sold. I have had to pay £14k tax due to the new home being considered a second home, which will be refunded if I sell my old home within three years.

However, I have had an offer to rent my old property for approximately six months. If I rent it out and still sell my house within the three years will I get the second home tax refunded or does the renting negate this?

Thanks.

Once the Renters Rights Bill becomes law, you won't normally be able to let for a defined period.

Does that apply to Northern Ireland?

No. The Bill extends mainly to just England and Wales, with a few provisions potentially applying to Scotland.

newbieni

poseidon1 said:

Renting does not negate ability to get the refund. Just avoid the short tenancy turning into a long one and interfers with your ability to sell within the time limit.

As a rookie landlord you might want to look into the traps and pitfalls of that role , as well as your new obligation to complete a self assessment tax return in future.

If property mortgaged, tax compliance now complicated with regard to how debt interest is treated.

There’s no mortgage on the property. Aside from the second property tax—which I believe can be recovered if the property is sold within three years, even if rented in the meantime—my only other question is how renting it out might affect any capital gains on the property.

GDB2222

newbieni said:

poseidon1 said:

Renting does not negate ability to get the refund. Just avoid the short tenancy turning into a long one and interfers with your ability to sell within the time limit.

As a rookie landlord you might want to look into the traps and pitfalls of that role , as well as your new obligation to complete a self assessment tax return in future.

If property mortgaged, tax compliance now complicated with regard to how debt interest is treated.

There’s no mortgage on the property. Aside from the second property tax—which I believe can be recovered if the property is sold within three years, even if rented in the meantime—my only other question is how renting it out might affect any capital gains on the property.

You will pay CGT on a proportion of the total gain on the property since you originally purchased it. The proportion is based on the time it’s not been your home, less 9 months, compared to the total time you have owned it.  

At least that’s my understanding. Hopefully, an expert will be along in a minute to correct my errors.