2nd home extra stamp?

[mutantpoodle]

my son inherited/was given a property abroad...its used as a holiday home
here he still lives at home

would he/will he, have to pay double stamp duty when he buys a flat here in UK in which to live?

local solicitors seem to disagree...

[Lootman]

A similar question was recently asked elsewhere:

viewtopic.php?f=13&p=175538#p175538

I do not have chapter and verse but I do recall reading that the existence of an overseas home would entail a higher rate of stamp duty in the UK. And I recall reading that because I found it to be quite shocking, for two reasons:

1) If you buy a UK home and then a foreign home, there is no stamp duty on the second purchase. So why on earth is the same not true if you buy the foreign home first?

2) How does the Land Registry even know what a UK resident owns overseas? It seems to me that in practice unless you volunteer the information about your holiday home to the conveyancer then the provision will never be enacted anyway.

[genou]

my son inherited/was given a property abroad...its used as a holiday home
here he still lives at home

would he/will he, have to pay double stamp duty when he buys a flat here in UK in which to live?

local solicitors seem to disagree...

It does not matter that it is a holiday home, nor that it is abroad. Only out would be if it is worth less than £40K.

[Lootman]

It does not matter that it is a holiday home, nor that it is abroad. Only out would be if it is worth less than £40K.

Worth less than £40K or whose original purchase price was less than £40K? Stamp duty generally works off actual transaction values and not theoretical market valuations or estimates.

The other "out" is simply to dispose of the overseas property first, either via a sale or some kind of gift or transfer to another family member.

[genou]

Worth less than £40K or whose original purchase price was less than £40K?

My understanding is market value under 40k, which matches the guidance here - https://www.gov.uk/hmrc-internal-manual ... sdltm09765 .

I'm failing to find the actual legislation; it may well be a number set in an SI.

[PinkDalek]

Worth less than £40K or whose original purchase price was less than £40K?

My understanding is market value under 40k, which matches the guidance here - https://www.gov.uk/hmrc-internal-manual ... sdltm09765 .

I'm failing to find the actual legislation; it may well be a number set in an SI.

There was a mention, at the foot of your link, of Schedule 4ZA of the Finance Act 2003. Will this suffice?:

http://www.legislation.gov.uk/ukpga/201 ... 28/enacted

[genou]

There was a mention, at the foot of your link, of Schedule 4ZA of the Finance Act 2003. Will this suffice?:

Indeed it does. Don't know how I missed that.

[Charlottesquare]

2) How does the Land Registry even know what a UK resident owns overseas? It seems to me that in practice unless you volunteer the information about your holiday home to the conveyancer then the provision will never be enacted anyway.

HMRC will possibly come to know about the overseas property if it is ever eventually sold as will need to include in CGT pages if UK resident.

Making a false statement on purchase of the UK property and not declaring the ownership of the additional property is akin to under declaring cash sales in a corner shop; tax evasion.

I have the exact problem, as and when we decide to downsize our house in the UK we either sell our house in Sweden first or trip 3% extra on that part of the price over £145,000 of the purchase price of the new UK (Scotland) property.

[mutantpoodle]

many thanks everyone

ok its not the answer I was hoping for...but its clear!

[Lootman]

How does the Land Registry even know what a UK resident owns overseas? It seems to me that in practice unless you volunteer the information about your holiday home to the conveyancer then the provision will never be enacted anyway.

HMRC will possibly come to know about the overseas property if it is ever eventually sold as will need to include in CGT pages if UK resident..

What I think might be more likely is that, at least for an overseas holiday home, the rental income declared annually would be an indicator that there might be a foreign home. The sale declaration could happen as you state it, but that might be years or even decades later. My point was more about how the procedure happens normally at the time, given that the parties involved in the conveyance would likely have no knowledge of the foreign property. Presumably there is a question about whether the buyer owns another property?

And whilst not advocating for any form of evasion, I do find myself being curious about how many buyers "forget" about their little holiday home in Spain, not least because it would probably never occur to most people that it has any relevance.

But yes, the safest way would be to sell, gift or otherwise transfer the foreign property on a timely basis. And then buy it back or a different place after the UK purchase has happened. Although how dumb does a tax rule have to be that makes that a logical and reasonable course of action?

[Charlottesquare]

How does the Land Registry even know what a UK resident owns overseas? It seems to me that in practice unless you volunteer the information about your holiday home to the conveyancer then the provision will never be enacted anyway.

HMRC will possibly come to know about the overseas property if it is ever eventually sold as will need to include in CGT pages if UK resident..

What I think might be more likely is that, at least for an overseas holiday home, the rental income declared annually would be an indicator that there might be a foreign home. The sale declaration could happen as you state it, but that might be years or even decades later. My point was more about how the procedure happens normally at the time, given that the parties involved in the conveyance would likely have no knowledge of the foreign property. Presumably there is a question about whether the buyer owns another property?

And whilst not advocating for any form of evasion, I do find myself being curious about how many buyers "forget" about their little holiday home in Spain, not least because it would probably never occur to most people that it has any relevance.

But yes, the safest way would be to sell, gift or otherwise transfer the foreign property on a timely basis. And then buy it back or a different place after the UK purchase has happened. Although how dumb does a tax rule have to be that makes that a logical and reasonable course of action?

I agree it is all pretty illogical but there are quite a lot of bits of tax like that,

e.g. sell your holiday home today trigger a CGT bill, day after drop down dead. You get CGT on your chargeable gain then IHT on balance after deducting tax arising during life re the gain, that being a liability of your estate. As an alternative still hold holiday home at date of death, now just have IHT on its value, CGT gets eliminated by dying with just IHT on gross value at date of death.

There are, for the morbid, some pretty good tax planning opportunities if critically ill, e.g. solely holding assets with large pregnant gains which are then left to one's spouse, washes out the CGT liabilities.

[Lootman]

There are, for the morbid, some pretty good tax planning opportunities if critically ill, e.g. solely holding assets with large pregnant gains which are then left to one's spouse, washes out the CGT liabilities.

Or marrying your beneficiary on your death bed, if legal to do so. Although it would be interesting to see if HMRC would then claim that the marriage was "mainly or wholely for tax reasons" and then seek to have the marriage retrospectively annulled.

Just a personal view but it seems to me that the taxes that cause the most annoyance are stamp duty and IHT, which might boost peoples' efforts to avoid them. Contrast that with CGT which, at 10% or 20%, and with an annual allowance, probably strike most people as fair and non-punitive, thereby attracting less avoidance.

A simple flat tax system with low rates would probably solve the evasion/avoidance problem a lot more than the endless closing of loopholes and making the tax code ever more complicated. But I digress . .

[Nimrod103]

There are, for the morbid, some pretty good tax planning opportunities if critically ill, e.g. solely holding assets with large pregnant gains which are then left to one's spouse, washes out the CGT liabilities.

Or marrying your beneficiary on your death bed, if legal to do so. Although it would be interesting to see if HMRC would then claim that the marriage was "mainly or wholely for tax reasons" and then seek to have the marriage retrospectively annulled.

Just a personal view but it seems to me that the taxes that cause the most annoyance are stamp duty and IHT, which might boost peoples' efforts to avoid them. Contrast that with CGT which, at 10% or 20%, and with an annual allowance, probably strike most people as fair and non-punitive, thereby attracting less avoidance.

A simple flat tax system with low rates would probably solve the evasion/avoidance problem a lot more than the endless closing of loopholes and making the tax code ever more complicated. But I digress . .

I have always regarded CGT as a most iniquitous tax, because usually the larger part of any gain is due to inflation, which is caused by Governments. As I recall there was a time when CGT liable gains could be discounted for inflation, but I guess the Chancellor realized how much income he was losing, and closed that avenue off.

[Lootman]

I have always regarded CGT as a most iniquitous tax, because usually the larger part of any gain is due to inflation, which is caused by Governments. As I recall there was a time when CGT liable gains could be discounted for inflation, but I guess the Chancellor realized how much income he was losing, and closed that avenue off.

True although when we did have indexation, we also had a CGT rate of 40%.

The removal of indexation was a quid pro quo for the huge decrease in CGT rates. That caused winners and losers as any tax change does. But to me it also had the virtue of simplification - computing the indexation on realised positions was a pain.

[Charlottesquare]

There are, for the morbid, some pretty good tax planning opportunities if critically ill, e.g. solely holding assets with large pregnant gains which are then left to one's spouse, washes out the CGT liabilities.

Or marrying your beneficiary on your death bed, if legal to do so. Although it would be interesting to see if HMRC would then claim that the marriage was "mainly or wholely for tax reasons" and then seek to have the marriage retrospectively annulled.

Just a personal view but it seems to me that the taxes that cause the most annoyance are stamp duty and IHT, which might boost peoples' efforts to avoid them. Contrast that with CGT which, at 10% or 20%, and with an annual allowance, probably strike most people as fair and non-punitive, thereby attracting less avoidance.

A simple flat tax system with low rates would probably solve the evasion/avoidance problem a lot more than the endless closing of loopholes and making the tax code ever more complicated. But I digress . .

28% re residential property of course, but yes, 20% HR on most gains is a bit of a steal. (Said just before next Monday, so tempting fate)