Everything you need to know about the stamp duty surcharge on properties abroad
As you’re probably already aware, purchasing a home comes with many cost implications, some of them being less obvious than others. One such cost is that of stamp duty surcharges, which was introduced in 2016 under new Treasury rules about second homes. Depending on which country you own a second home in, the rules will be different. Read on to find out more about the stamp duty surcharge on properties abroad.
What does the stamp duty surcharge mean?
The stamp duty surcharge is a tax that is applicable to anybody buying a second home worth more than £40,000. The surcharge took effect from 1 April, 2016, but it was first announced in the Chancellor’s 2015 Autumn Statement.
What if the home abroad will be my main residence?
The term Main residence’ refers to the home you live in, not just a property you own. Whichever home is considered to be your main residence will be judged on a number of different factors, including where you spend most nights throughout the year, where your family lives and where you are registered to vote.
If the home you are buying replaces your main residence, you will not be liable for the 3% surcharge, even if you own an additional property/properties (such as a second home or a flat you rent out) at the same time.
Situation for expat owners
There’s a lot of confusion and mixed messages circulating regarding the stamp duty surcharge and what it means for those who own property abroad. To give some examples of how it works, consider this. If you are an expat living abroad in rented accommodation, and then you buy your first home in the UK and rent it out, you will not pay the stamp duty surcharge.
But if you own a house in Spain and then buy in the UK, you will pay the higher tax, as the UK house will be deemed a second residential home.
Tax implications and the cost of purchasing property abroad can be confusing, so if you need assistance and advice, call up and speak to a member of our team. We are experienced when it comes to dealing with people in negative equity, as well as those trying to sell and purchase homes abroad.
Should you be facing any of the issues mentioned above, feel free to speak to one of our team here at EU Property Solutions. Our advisers are well versed in dealing with all issues surrounding foreign property debt. Feel free to give us a call on 0330 124 1230, to arrange an impartial, no obligation, free consultation.