We regularly receive questions about accounting and tax issues through our website and by email. In this article we thought we would share a couple of recent questions and our answers about property tax issues.
Claiming back Stamp Duty Land Tax
Q: Can we claim the higher rate stamp duty back on our main home?
We owned a rental property which was never our main home, then bought our home paying the higher rate of stamp duty. We sold the rental property 5 months later. We are now selling our home and buying a new home. We have heard it is possible to claim back the higher rate of stamp duty on purchasing a main home in certain circumstances?
A: Very broadly, the higher rate stamp duty land tax (“SDLT”), an additional 3%, applies when you purchase a residential property at any time when you already hold an interest in another residential property. So if you purchase a new home before you have sold your old home, you have to pay the additional 3%. It is possible to claim this back, provided the old home is sold within 3 years. However, it has to be a main residence that is sold, not a rental property.
This relief also applies, if previously you had a main residence. The normal time limit is 3 years. However as you acquired your home before 26th November 2018, the 3 year time limit does not apply (under the transitional rules). So if you (or your spouse/civil partner) owned a main residence at any time in the past, then you could now claim the higher rate back. The main residence must have been acquired as a main residence, with the intention to so be used, so not with the intention of, for example, renovating and then selling.
Property investor incidental costs
Q: I am a property investor. Prior to relocating overseas last year, I tried to re-mortgage some of my properties. Unfortunately, due to the low valuations, none of the re-mortgages happened. I ended up paying about £10,000 in survey, broker and mortgage application fees. Are these fees tax deductible?
A: The costs you mention are ‘incidental costs of obtaining finance’. Where such costs are incurred wholly and exclusively for the purpose of obtaining the finance, of providing security for it, or of repaying it, they are allowed as a deduction even if the finance is not in fact obtained.
Note that these fees are now subject to the new interest restriction rules which are being phased in over 4 years from 6th April 2017.
Our answers, whilst provided to the best of our knowledge, are for general guidance only. More specific advice should be obtained before taking action. We accept no liability for any action taken on the basis of the above views.
Please contact Mark Wildi, to discuss any property tax issue, on 1689 877081 or complete our online form.