New, extra 3% Stamp Duty on BTL?
Discussion
Welshbeef said:
I'll try again
You have an overseas property
You never have and never will receive rental or let income as it is a holiday home only and you are not going to let it out.
There is nothing to declare - how would the Govt ever know you had such a property?
Replies in bold (hopefully)
As long as there is no income being derived, there is nothing to declare to HMRC. If and when the property is disposed of, there might be a Capital Gains Tax liability arising which will result in a disclosure requirement
Personally I have 2 overseas properties one rents out the other we will never let it out it is our place so all of our stuff in there and in theory I could live there if I so wished. I pay local income tax on the rental and declare all on my self assessment as you rightly say given the country where they are based has a tax agreement with the U.K. Double taxation relief is an allowance (online form does this all for you).
However would they be classified as B2L? They are not part of he UK not preventing any UK local from purchasing or upping demand. If they are then if you'd never had any income nor ever would why or how would the govt know you had it? They wouldn't but if they did does the 3% kick in?
Do you have a main residence in the UK? If you do, any Additional property purchased in the UK will be subject to the new 3% Stamp Duty at the point of purchase.
You have an overseas property
You never have and never will receive rental or let income as it is a holiday home only and you are not going to let it out.
There is nothing to declare - how would the Govt ever know you had such a property?
Replies in bold (hopefully)
As long as there is no income being derived, there is nothing to declare to HMRC. If and when the property is disposed of, there might be a Capital Gains Tax liability arising which will result in a disclosure requirement
Personally I have 2 overseas properties one rents out the other we will never let it out it is our place so all of our stuff in there and in theory I could live there if I so wished. I pay local income tax on the rental and declare all on my self assessment as you rightly say given the country where they are based has a tax agreement with the U.K. Double taxation relief is an allowance (online form does this all for you).
However would they be classified as B2L? They are not part of he UK not preventing any UK local from purchasing or upping demand. If they are then if you'd never had any income nor ever would why or how would the govt know you had it? They wouldn't but if they did does the 3% kick in?
Do you have a main residence in the UK? If you do, any Additional property purchased in the UK will be subject to the new 3% Stamp Duty at the point of purchase.
Welshbeef said:
Hi Eric so if you simply move house but have more than 1 property in the UK do you then get stung by 3%
Let's say you have £3m house and move to a £3.5m house and a couple of £250k houses would they have to pay 3% on the £3.5miillion?
You can dream up all sorts of permutations if you want. Lots of people are doing just that. Like in Capital Gains Tax, the key is establishing what is your main residence. Selling a main residence and acquiring a new main residence to replace it should not incur the 3% surcharge.Let's say you have £3m house and move to a £3.5m house and a couple of £250k houses would they have to pay 3% on the £3.5miillion?
Having a main residence and acquiring an additional property that is not your main residence (or two or three or more) WILL incur the 3% surcharge each time you buy an additional property.
Welshbeef said:
Hi Eric so if you simply move house but have more than 1 property in the UK do you then get stung by 3%
Let's say you have £3m house and move to a £3.5m house and a couple of £250k houses would they have to pay 3% on the £3.5miillion?
That is the question to which no one has an answer, yet. I'm sure Mr Osbourne will make a decision on the matter in due course.Let's say you have £3m house and move to a £3.5m house and a couple of £250k houses would they have to pay 3% on the £3.5miillion?
But what if you're keeping the residential property you've moved out of and convert that to a BTL... Would an extra 3% be payable and if so, on what amount? The purchase price of the new property (seems unfair if you're sizing up)? The original purchase price of the old property? Market value of the old property?
Eric Mc said:
The answer should be "No" - provided the house you are buying will be your main residence.
With all the best will in the world at the point of buying the house it was planned to be a main residence then let's say the day after you unfortunately lose both parents and inherit their "mansion" you decide to move into that and then let out the house you'd just bought. So many issues
Shaoxter said:
But what if you're keeping the residential property you've moved out of and convert that to a BTL... Would an extra 3% be payable and if so, on what amount? The purchase price of the new property (seems unfair if you're sizing up)? The original purchase price of the old property? Market value of the old property?
As I said, people can sit around dreaming up all sorts of permutations.I would guess that in a case where a person has moved out of their former main residence and then decided to let it out rather than sell it, they will NOT have to pay the extra 3% PROVIDED that there is some sort of meaningful time gap between the original purchase of the property as a main residence and its subsequent conversion into a let property.
There would be scope for abuse (as there already is under the Capital Gains Tax rules) so the legislation will have to include anti-avoidance measures.
Like the cases that occur under Capital Gains Tax rules, whether the transaction should have been subject to the additional 3% Stamp Duty will sometimes have to be decided in a tax tribunal or court case.
That's the nature of tax.
Welshbeef said:
With all the best will in the world at the point of buying the house it was planned to be a main residence then let's say the day after you unfortunately lose both parents and inherit their "mansion" you decide to move into that and then let out the house you'd just bought.
So many issues
Of course. Tax can get complex because life can get complex.So many issues
As I keep saying, many of the issues that will crop up regarding this new 3% levy will mirror very similar issues that have cropped up under the Capital Gains Tax rules. Because of Capital Gains Tax, we have 5 decades of case law regarding what constitutes a main residence.
Eric Mc said:
Property development as a business should not be discouraged by tax policy.
Property INVESTMENT by individuals as a means of providing income and security in old age should.
Why should individuals be taxed highly? I'd happily put my money into a pension but I simply don't trust any BTL is a good way forward.Property INVESTMENT by individuals as a means of providing income and security in old age should.
You and others seem to have an issue with people wanting to secure their future, I guess your future is secure?....
This Landlord bashing needs to stop. Landlords provide a service (usually very good) that the public sector cant or in some cases gave up on.
What some people fail to realise is there are a number of people who don't want to buy and prefer renting, contract workers, students, doctors and nurses working away ect ect. I rent the house I live in and to be honest I prefer it.
There are a lot of people who cant afford to buy and need to rent.
I have friends that pay a fortune in rent but because of mortgage affordability rules cant get a mortgage that would in some cases by a 1/3rd cheaper than rent.
I do find it odd that people with properties of 15 or more are exempt from this tax. wouldnt it be better to tax them? Oh hangon it the rich get richer and bash those who are simply trying to make ends meet.
As a landlord myself (one BTL) i'm planning a few more. I'd live 5
To those who constantly bash landlords look at the bigger picture, we provide a service. Simple.
Edited by 528Sport on Thursday 26th November 15:23
Securing YOUR personal future at the risk of blocking access to house ownership to others may be considered a price the country can't afford - economically, socially or politically .
It does seem that the government has woken up to the dramatic social impact the rush to buy to let ownership has had on the country.
And perhaps surprisingly, it's a Conservative government that has seen the light.
It does seem that the government has woken up to the dramatic social impact the rush to buy to let ownership has had on the country.
And perhaps surprisingly, it's a Conservative government that has seen the light.
Welshbeef said:
With all the best will in the world at the point of buying the house it was planned to be a main residence then let's say the day after you unfortunately lose both parents and inherit their "mansion" you decide to move into that and then let out the house you'd just bought.
So many issues
Have you reviewed HS283 which was updated earlier this year? Might that (i.p letting relief) help?So many issues
https://www.gov.uk/government/publications/private...
Eric Mc said:
Securing YOUR personal future at the risk of blocking access to house ownership to others may be considered a price the country can't afford - economically, socially or politically .
It does seem that the government has woken up to the dramatic social impact the rush to buy to let ownership has had on the country.
And perhaps surprisingly, it's a Conservative government that has seen the light.
Morality aside, I think we're in danger of conflating the subtleties of the issue here. It does seem that the government has woken up to the dramatic social impact the rush to buy to let ownership has had on the country.
And perhaps surprisingly, it's a Conservative government that has seen the light.
It's not so much second/third/fourth home ownership I have an issue with; rather, owning a second/third/fourth home(s) which are left (needlessly) empty and which may, reasonably, be otherwise rented out fairly. In my experience, the people who most have an issue with the moral hazard are those who have well funded (publically bolstered) pensions or decent ISA portfolios which lawfully negates nearly all tax.
The other practical issue is a financial one. Let's imagine that someone in their forties inherits some money they're thinking about investing somehow into a BTL. Rather than pay the c.£8000 they might reasonably be expected to, they decide to invest it into their pension instead. The government therefore, then has possibly a 40% payment to make on it, as well as possibly, the investor claiming their child benefit back.
Eric Mc said:
Securing YOUR personal future at the risk of blocking access to house ownership to others may be considered a price the country can't afford - economically, socially or politically .
It does seem that the government has woken up to the dramatic social impact the rush to buy to let ownership has had on the country.
And perhaps surprisingly, it's a Conservative government that has seen the light.
I can see that side of the argument BUT sort the stupid affordability rules out then more of the renters might buy. Blaming landlords for providing a service doesn't help. It does seem that the government has woken up to the dramatic social impact the rush to buy to let ownership has had on the country.
And perhaps surprisingly, it's a Conservative government that has seen the light.
Also bear in mind that there are very few rules for BTL mortgages.
Does rent cover 125% of mortgage?
Do you own another BTL?
Do you have at least a 15% deposit?
If you can answer yes to the above usually thats all the requirments ticked.
Why not stop those "individuals" who have hundreds of homes?
528Sport said:
What some people fail to realise is there are a number of people who don't want to buy and prefer renting, contract workers, students, doctors and nurses working away ect ect.
What annoys me more is it's a spiral that only gets worse- higher prices so more first time buyers have to rent, which in turn creates more demand for rental properties giving BTL landlords the sense they are providing a valuable service and attracting others to do likewise- which pushes prices up further thus pricing out even more first time buyers etc etc.
528Sport said:
There are a lot of people who cant afford to buy and need to rent.
I have friends that pay a fortune in rent but because of mortgage affordability rules cant get a mortgage that would in some cases by a 1/3rd cheaper than rent.
Exactly, so legislation that makes personal investment in property less attractive to allow more people to buy a 'home' is a good thing surely?I have friends that pay a fortune in rent but because of mortgage affordability rules cant get a mortgage that would in some cases by a 1/3rd cheaper than rent.
528Sport said:
As a landlord myself (one BTL) i'm planning a few more. I'd live 5
To those who constantly bash landlords look at the bigger picture, we provide a service. Simple.
Ok maybe not!To those who constantly bash landlords look at the bigger picture, we provide a service. Simple.
I know everyone is entitled to their own opinions, but I fully welcome any & every change that makes property as an 'investment' less attractive.
I know I live in arguably the worse area affected, but having seen my sister's first house (simple 2 bed terrace starter home) recently sell for £65,000 more than they sold it for less than 18 months previous, it makes my £1,000 a month deposit saving look somewhat futile, without moving 50 miles north.
Ginge R said:
Morality aside, I think we're in danger of conflating the subtleties of the issue here.
It's not so much second/third/fourth home ownership I have an issue with; rather, owning a second/third/fourth home(s) which are left (needlessly) empty and which may, reasonably, be otherwise rented out fairly. In my experience, the people who most have an issue with the moral hazard are those who have well funded (publically bolstered) pensions or decent ISA portfolios which lawfully negates nearly all tax.
I completely agree with everything you've said.It's not so much second/third/fourth home ownership I have an issue with; rather, owning a second/third/fourth home(s) which are left (needlessly) empty and which may, reasonably, be otherwise rented out fairly. In my experience, the people who most have an issue with the moral hazard are those who have well funded (publically bolstered) pensions or decent ISA portfolios which lawfully negates nearly all tax.
Most private BTL landlords provide a good service and would like to secure their furure buy providing a service to those who either don't want to buy or simply cant for a massive number of reasons.
I wonder if those who bash landlords have an issue with the council renting houses to their tenants? Probably not......
If the right to buy scheme hadn't been brought in the councils would have plenty of housing stock and their'd be less of a private sector in the market.
Maybe when an individual bought under RTB that money should have gone straight to replacing that property they bought?
528Sport said:
I wonder if those who bash landlords have an issue with the council renting houses to their tenants? Probably not......
Usually at well below market value rent, allowing tenants to save for a deposit if they wish.528Sport said:
If the right to buy scheme hadn't been brought in the councils would have plenty of housing stock and their'd be less of a private sector in the market.
Maybe when an individual bought under RTB that money should have gone straight to replacing that property they bought?
Squirrelofwoe said:
528Sport said:
What some people fail to realise is there are a number of people who don't want to buy and prefer renting, contract workers, students, doctors and nurses working away ect ect.
What annoys me more is it's a spiral that only gets worse- higher prices so more first time buyers have to rent, which in turn creates more demand for rental properties giving BTL landlords the sense they are providing a valuable service and attracting others to do likewise- which pushes prices up further thus pricing out even more first time buyers etc etc.
528Sport said:
There are a lot of people who cant afford to buy and need to rent.
I have friends that pay a fortune in rent but because of mortgage affordability rules cant get a mortgage that would in some cases by a 1/3rd cheaper than rent.
Exactly, so legislation that makes personal investment in property less attractive to allow more people to buy a 'home' is a good thing surely?I have friends that pay a fortune in rent but because of mortgage affordability rules cant get a mortgage that would in some cases by a 1/3rd cheaper than rent.
528Sport said:
As a landlord myself (one BTL) i'm planning a few more. I'd live 5
To those who constantly bash landlords look at the bigger picture, we provide a service. Simple.
Ok maybe not!To those who constantly bash landlords look at the bigger picture, we provide a service. Simple.
I know everyone is entitled to their own opinions, but I fully welcome any & every change that makes property as an 'investment' less attractive.
I know I live in arguably the worse area affected, but having seen my sister's first house (simple 2 bed terrace starter home) recently sell for £65,000 more than they sold it for less than 18 months previous, it makes my £1,000 a month deposit saving look somewhat futile, without moving 50 miles north.
"but I fully welcome any & every change that makes property as an 'investment' less attractive."
Then why not make it less attractive to EVERYONE not just those with less that 15 properties?
Make mortgages easier to get for home ownership then.
As I said earlier the rules for BTL mortgages are so simple. No affordability checks in most cases...
Instead of bashing landlords help people buy a home. Until this happens we will need MORE landlords.
Could the refugees coming to this country get a mortgage instantly? No so you need a BLT property for them.
Like I said earlier there is a demand for the service
Gassing Station | Finance | Top of Page | What's New | My Stuff