Property tax can be confusing, especially when it comes to paying taxes on property which is not considered to be your main home. A Glasgow accountant can help you to to make sure you are paying the correct property tax on a second home.
What Counts as a Second Home?
Any property other than your main home is considered a second home. This means that even if you are planning to buy a second home as: a holiday rental; an investment or helping your family to buy, you will need to pay the higher rate of stamp duty on this property. Basically, if you plan on buying any other property on top of your main home, then you will be required to pay the higher rate of stamp duty.
As of April 2016, the rate of stamp duty on second homes has increased. This means that anyone buying a second home will pay a higher rate of stamp duty than someone who is buying their main home.
Stamp duty, (or stamp duty land tax) is paid by people buying property or land. When purchasing your main house, you do not have to pay any stamp duty if the property costs less than £125,000. The rate of stamp duty paid increases in tiers based on the cost of the land or property. Stamp duty on a second home works using a similar tier system, however, you must pay stamp duty on a second property, no matter how much the property costs – again, there are some exceptions to this rule, an accountant can help identify exceptions which may apply to you.
Paying Tax on a Second Home
When selling any property that is not your own home, then you may be required to pay “Capital Gains Tax”. You will be required to pay this if you make a profit, or gain from selling any property that is not considered your main home. This typically applies if the property was used as: a buy-to-let, business premises, land or inherited property then you will be required to pay Capital Gains Tax.
You may become exempt from Capital Gains Tax if it is a gift from your husband, wife or civil partner or if it is charity. If the property is considered to be a business asset you may also receive tax relief. Furthermore, if the property was occupied by a dependent relative, then you may not have to pay – however there are rules surrounding this. An accountant can help determine whether you should be paying tax on a second home, it is important to get right!
How Can an Accountant Help You?
When you own more than one property, it can be challenging to keep on top of and understand the different taxes you need to pay for each property. An accountant can identify your main property and determine if you need to pay tax on a second home! A Glasgow accountant can help with business financial situations too, look at our last post about employment status!
At The Kelvin Partnership, we can help you to understand property tax – if you are interested in our services, then get in touch to find out how an accountant can help you.