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UK second home stamp duty

Re: UK second home stamp duty

Postby PGA » Tue Oct 30, 2018 7:20 pm

Paulr wrote:Hi PGA,

We sold our home in the UK in 2016 and, from the proceeds, bought our main residence in Spain and a smaller property in the UK. If we hadn't bought the property in Spain, so that the smaller one in the UK was our main and only residence, the SDLT would have been £1,300. However, as the UK property is classed as our second residence, the SDLT on that purchase was £7,000 - a significant difference! Fortunately, my wife is very good at this sort of thing and had budgeted for it, but as you say, it could be make or break for the plans of some people.

You're spot on with your comment, "the knock-on effect it has on foreign property owners perhaps hasn't been immediately obvious and the absence of many articles on the matter online suggest it hasn't been widely observed." However, HMRC's amnesty on UK tax residents who haven't declared ownership of, and/or rental income from, their overseas properties expired in September this year - and, unlike Spain's tax authorities, which only goes back 4 years to retrospectively collect unpaid taxes, HMRC can go back up to 20 years. ... ore-assets

Best wishes for making your sums work,

Interesting stuff Paul.

So even though your UK sale and purchase ran consecutively from one sale to one purchase, the concurrent Spanish purchase then cause the UK smaller property to be considered a "second property"? I am interested as to how they are defining "main home" as per Shiva's post earlier. It does not seem to be tax-residency as the basis of it.

If you own no property in the UK I can see the case for saying your Spanish owned property is the "main home" as you have no other. However, if you sell in the UK, buy in the UK and buy in Spain, what prevents you nominating the UK purchase as a main home? If not, what is the difference to any Spanish property owner selling their UK property to buy a new one and be stung with the second home stamp duty?

I will have a chat with my own accountant but feel its more likely a tax lawyers area.
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Re: UK second home stamp duty

Postby PGA » Tue Oct 30, 2018 7:23 pm

"However, as the UK property is classed as our second residence"

I guess this is the question - what made it be classified as this?

If you had bought the UK property before the Spanish property you would have not been subject to the additional 3%. I guess that is the trap that I am concerned by and others should be aware of, especially when many will be reliant on a UK house sale to buy in Spain. To avoid the additional SDLT you need to buy any UK property you intend to before buying the Spanish property. Doing so the other way around can cost you dearly now.
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