health and fitness: Does the 3% stamp duty for second properties apply in Scotland?

jeudi 7 janvier 2016

Does the 3% stamp duty for second properties apply in Scotland?

We might rent out our flat and buy a house, but are unsure if the stamp duty rules apply to our new house even though we’d be living in it

Q I live with my wife in a flat in central Glasgow and we’re looking to move somewhere quieter with more space.

The market conditions for our flat appear to be more favourable for renting than buying – some flats take ages to sell, but are very popular with renters. Perhaps because it’s in an area popular with students and young professionals. We’re therefore considering letting out the flat and buying a new house.

The flat is worth somewhere between £170,000 and £180,000 and I have a mortgage with around £100,000 of outstanding debt. Other flats in our block are let for about £850 per month.

Both the existing and new properties are in Scotland – does the proposed 3% stamp duty land tax for second properties apply in Scotland? If so, and we kept our flat, would this apply to our new house even though we’d be living in it?

We would need to get a buy-to-let mortgage on the flat – the existing mortgage is in my name only. Could this be taken out by my wife and the rental income paid to her? If yes, would this make sense given that she earns less than me (we both earn below the higher-rate tax bracket)?

I have some separate savings for a deposit for the new house, but are there any options for using some of the equity in the existing flat towards a deposit for the new house? LS

A The new higher rates of stamp duty land tax (SDLT) do not apply in Scotland because SDLT has been abolished there. However, the Scottish government replaced SDLT with land and buildings transaction tax (LBTT). This is remarkably similar to SDLT and will introduce a 3% supplement on the tax paid on the purchase of additional residential properties on or after 1 April 2016.