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UK second home stamp duty

UK second home stamp duty

Postby PGA » Mon Oct 29, 2018 5:06 pm

Has anyone "suffered" this yet if moving property within the UK?

There seems little doubt that the Spanish property ownership counts as a property for UK SDLT. As such, if you were to move between a singular property in the UK (downsize for example) then you get clobbered with the additional 3% SDLT on top of regular SDLT by virtue of the fact you own a house in Spain.

A tad frustrating and cannot see any work-around and worth keeping in mind as an overall additional cost to foreign home ownership now unless you never have any intention of selling a UK property.
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Re: UK second home stamp duty

Postby Shiva » Mon Oct 29, 2018 5:43 pm

Interesting point, looking at the rules the only exemption would be if you are UK tax resident and the UK property is your main home and you are replacing your main home ( eg selling one house and buying another) . You'd have to be Uk tax resident as it would have to clearly be your main home ( and the spanish property is the second or holiday home) "When does the higher rate of Stamp Duty not apply?
If you are directly replacing your main residence, you will not be required to pay the higher rate of Stamp Duty. That means that if you are selling (or gifting) your current main residence and are buying another house as your main residence, you will not be required to pay the higher rate of Stamp Duty."
This is from this site https://www.expertsforexpats.com/expat- ... -tax-sdlt/

But if your Spanish home is your main home , yes you'll have to pay the extra stamp duty on anything you buy in the UK.
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Re: UK second home stamp duty

Postby PGA » Mon Oct 29, 2018 6:11 pm

Shiva wrote:Interesting point, looking at the rules the only exemption would be if you are UK tax resident and the UK property is your main home and you are replacing your main home ( eg selling one house and buying another) . You'd have to be Uk tax resident as it would have to clearly be your main home ( and the spanish property is the second or holiday home) "When does the higher rate of Stamp Duty not apply?
If you are directly replacing your main residence, you will not be required to pay the higher rate of Stamp Duty. That means that if you are selling (or gifting) your current main residence and are buying another house as your main residence, you will not be required to pay the higher rate of Stamp Duty."
This is from this site https://www.expertsforexpats.com/expat- ... -tax-sdlt/

But if your Spanish home is your main home , yes you'll have to pay the extra stamp duty on anything you buy in the UK.



Yes, that is my understanding.

Would also be interested to see if you were UK "based" and yet did not fluidly move, yet owned a property in Spain (or anywhere for that matter), whether you would escape having to pay 2nd home stamp duty on re-entering the market within the UK but yet being the "owner" of another property abroad. Yes, it is a replacement of your "main home" but whether the default would switch to that being your foreign property at disposal of the UK home - as I say, in circumstances whereby the move was not fluid from one immediately to the next.

It seems the definition of "main" home is a physical text and not a country of tax residency etc test.

I appreciate its rare circumstances but worth noting and I find myself in a funny old conundrum as a result so thought I would flag it here.
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Re: UK second home stamp duty

Postby Shiva » Mon Oct 29, 2018 8:29 pm

Might not be that rare a circumstance if someone living in Spain decided to buy a property in the UK whether for their own use or to rent out. Another little taxman trap waiting to catch the unwary... As they say, only two things certain in life....
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Re: UK second home stamp duty

Postby marcliff » Mon Oct 29, 2018 8:48 pm

That particular loophole, where you could claim a main home in UK and one abroad, was closed in 2015.
And surely it is dependant on where you are resident? Non-residents, by definition, cannot claim a home in Spain as their main home and miss out on many tax benefits, not least the non paying of CGT when selling one home and using the profit to buy another one (anywhere in the EU). Or the 3% retention tax.
In UK you can have two homes and declare either one to be your main residence. Even if you live in, say, Devon and have a place in London you only use at weekends. You can claim the London one as the main residence as it will obviously be more expensive. (MPs have been doing it for years, it's called flipping). However, in that case, your main residence is UK for whichever property you declare to be your main home.
If you own one in UK and one in Spain then it would depend on where you have declared residency.
If Spain is your main home then you will be liable to the higher stamp duty rate in UK as that will be classed as a second home. You will also become liable to CGT from 2015 in UK if you sell and to CGT in Spain from the time you took out residency.
You can offset the payment in UK against the amount due in Spain.
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Re: UK second home stamp duty

Postby PGA » Mon Oct 29, 2018 10:56 pm

Shiva wrote:Might not be that rare a circumstance if someone living in Spain decided to buy a property in the UK whether for their own use or to rent out. Another little taxman trap waiting to catch the unwary... As they say, only two things certain in life....



Indeed.

I am rather bearish on the UK market at the minute so have moved to cash. No intention to be out of the country for in excess of 183 days but if I purchase abroad and subsequently see a re-entry point in the UK market it appears, from my cursory research at least, as though I will be hit with an additional 3% SDLT on top of what would be usually payable.

It adds another considerable sum to the equation.

If I own in Spain when I do not in the UK, if I buy in the UK it seems I will be clobbered by the extra 3%. If I then sell in the UK and replace that with another UK "main residence", I am trying to establish whether my second property abroad factors in each time.
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Re: UK second home stamp duty

Postby GLASSMAN » Tue Oct 30, 2018 7:46 am

if you can afford 2,3 or even 4 homes you should factor in all costs to see if you can afford to be in that situation,and all associated costs that go with owning multiple homes,should have thought that's good sense,I know avoiding paying the tax etc,instead of second hand info on here,everyones situation can be different, why not contact an accountant or tax office?for the real information, theres lots out here who have holiday homes and fail to maintain them to a suitable standard,unpainted ballustrads, litter strewn patios , alarms going off when batterys running down, etc,
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Re: UK second home stamp duty

Postby PGA » Tue Oct 30, 2018 12:36 pm

Thanks Glassman.

I'd like to think by being aware of thrown-away costs and potential work arounds or alternative routes is partly the reason that you can get to a point in life where you can enjoy 2 homes!

I shall seek professional advice on the matter but thought I would flag it here both in case someone has already been in the situation and/or as a way to perhaps flag it up in case it hadn't crossed the minds of other forum members. As the tax was introduced (supposedly) as a measure to tax the BTL market in the UK, 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.

It may also alter the sums too when timing a move/purchase abroad. If you have to account for an additional 5 figure "penalty" under the second home stamp duty you would be wise to factor that into your calculations (and perhaps timings) of a purchase in sunny climes.
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Re: UK second home stamp duty

Postby Johnny » Tue Oct 30, 2018 4:29 pm

Well
I have a home in Spain and bought a flat in the uk.
And I got charged the second home tax.
Yes I’m resentment in Spain as this is my main hom.
But still have to pay 5he additional tax.
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Re: UK second home stamp duty

Postby Paulr » Tue Oct 30, 2018 6:32 pm

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.

https://www.gov.uk/government/news/hmrc ... ore-assets

Best wishes for making your sums work,
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