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    Maximising Stamp Duty Refunds – How Do I Claim?

    Stamp duty land tax (SDLT) is a significant expense in the property buying process, and homeowners often bear its weight. While attempting to avoid SDLT can lead to complications, some buyers may have overpaid or qualify for retrospective exemptions, opening the possibility of a stamp duty refund.

    In this guide, we explore the reasons why a stamp duty refund may be granted, the claims procedure, and the expected timeline for receiving refunds from HMRC. But first, let’s quickly review the fundamentals of stamp duty to set the stage.

    If you believe you may be eligible for a stamp duty refund or wish to learn more about the process, read on and discover how to make the most of your opportunities.

    What is stamp duty?

    Stamp duty land tax (SDLT) is a tax applicable to property and land purchases in England and Northern Ireland. Similar schemes exist in Scotland (Land and Buildings Transaction Tax – LBTT) and Wales (Land Transaction Tax – LTT).

    The amount of SDLT you’ll pay depends on various factors, including your buyer status (landlord, first-time buyer, holiday home purchaser) and the property’s price.

    In property transactions, buyers bear the responsibility of paying SDLT, while sellers are not obligated to do so. However, in many cases, sellers purchase another home, leading to both parties paying SDLT for separate transactions.

    It’s important to note that stamp duty is a standalone tax and does not include VAT.

    Understanding the intricacies of SDLT is vital when engaging in property or land purchases, ensuring compliance with tax obligations and making informed decisions throughout the process.

    What is the stamp duty surcharge?

    In addition to the standard stamp duty payment, a surcharge applies under the following circumstances:

    The stamp duty surcharge has been in effect since April 1st, 2016, impacting eligible buyers.

    It’s crucial to be aware of these additional factors when calculating stamp duty obligations, ensuring accurate financial planning and informed decision-making during property transactions.

    How long do I have to make a claim for a stamp duty refund?

    It is crucial to initiate your refund claim in a timely manner, considering the associated deadlines.

    If you sold your property on or after October 29, 2018, the following timelines apply:

    For sales made prior to that filing date, the deadlines are as follows:

    Missing these deadlines will render your refund claim invalid. Act promptly to ensure compliance with the timelines and maximise your chances of a successful stamp duty refund.

    Who is entitled to a HMRC stamp duty refund?

    While stamp duty guidelines provide clarity on who is liable to pay and the calculated amounts, there are instances where a stamp duty refund may be applicable, highlighting the complexity of the process.

    Consider the following scenarios where buyers may be eligible to claim a stamp duty refund from HMRC:

    1. Property value reassessment: If the property value is subsequently reassessed and falls into a lower stamp duty bracket, a refund may be available for the difference.
    2. Multiple-property purchase: If multiple properties were inadvertently included in the stamp duty calculation, resulting in an overpayment, a refund can be claimed for the excess paid.
    3. Failed property transactions: In cases where a property purchase falls through and the stamp duty has already been paid, a refund can be sought.
    4. First-time buyer relief: If a buyer was not initially aware of their eligibility for first-time buyer relief, a refund can be claimed if the necessary criteria are met.

    Navigating these scenarios can be complex, but understanding your eligibility for a stamp duty refund is crucial. Consult with HMRC or a tax professional to explore potential refund opportunities and ensure you receive the appropriate reimbursement.

    Can I reclaim stamp duty on a second property?

    To be eligible for a stamp duty refund on your second home surcharge, you must sell your main residence within three years of paying the additional 3%.

    For properties sold on or before October 28, 2018, you should make the claim within one year of the stamp duty filing on the purchase or within three months of the sale’s completion date, whichever is later.

    If the property was sold on or after October 29, 2018, your refund request must reach HMRC within 12 months of selling the main residence or within a year of the new residence’s stamp duty filing date, whichever is later.

    The sale of a main residence can occur for various reasons, including:

    Understanding the specific timeframes and scenarios for claiming a stamp duty refund on the second home surcharge is crucial. Ensure timely submission of your request to HMRC to potentially secure a refund in eligible circumstances.

    Stamp duty land tax refund for houses with an annexe

    Many individuals remain unaware that they may have overpaid stamp duty due to a specific circumstance. If you paid a stamp duty surcharge on a property with an annexe, granny flat, or similar smaller building on the main home’s grounds, you might be eligible to claim a refund from HMRC.

    This opportunity stems from a rule change implemented in 2018. Properties with a self-contained annexe are now considered a single home, rather than two separate properties, as long as the main building represents at least two-thirds of the property’s overall value.

    If your property fits this category and your purchase occurred after the rule change, you could potentially receive a significant refund. Reach out to your conveyancer to determine the rate you paid and request a resubmission if any errors were made.

    Don’t overlook this chance to claim a stamp duty refund. Act now to explore whether you are eligible and seize the opportunity for a substantial reimbursement.

    Shared ownership stamp duty refund for first-time buyers

    In the 2018 Autumn Budget, the Chancellor announced that first-time buyers purchasing shared ownership properties would be exempt from paying stamp duty if the home’s value is below £500,000.

    What’s even more beneficial is that this relief can be applied retrospectively. If you bought a shared ownership property as a first-time buyer on or after November 22nd, 2017, you may be eligible for a stamp duty refund.

    Take advantage of this opportunity for potential savings by exploring your eligibility for a stamp duty refund as a first-time buyer of a shared ownership property. Contact relevant authorities or seek professional advice to initiate your refund claim and secure any reimbursement you may be entitled to.

    Stamp duty refund on uninhabitable buildings

    The recent high-profile tribunal hearing of Paul and Nikki Bewley has garnered national attention, potentially paving the way for future claims concerning properties deemed uninhabitable.

    In January 2017, the Bewleys purchased a derelict bungalow for £200,000 as a buy-to-let investment. The property lacked central heating and contained asbestos. Their plan was to demolish the existing structure and build a new home to let to tenants. Initially believing they were exempt from the buy-to-let surcharge, they paid the standard rate of stamp duty (£1,500), only to later receive a demand from HMRC for £7,500!

    According to the Housing Act of 1967, for a property to be deemed habitable, it must have essential facilities like a functional bathroom, toilet, and kitchen. HMRC, however, argued that the Bewleys’ investment would be fit for habitation in the future.

    The tribunal ruled in favour of the Bewleys, declaring the property unsuitable for immediate habitation and thereby exempting them from the stamp duty surcharge.

    This landmark decision has significant implications. Landlords who previously paid the top rate for properties requiring extensive renovation to become livable spaces may now question hundreds of past surcharges. While it’s still early, there is speculation that HMRC could face a wave of retrospective claims for stamp duty refunds as a result.

    Stay informed and monitor developments in this area, as this ruling may open the door for potential refunds and relief for landlords who have encountered similar situations. Seek professional advice to assess your eligibility and navigate the process effectively.

    SDLT refund on miscalculated properties

    One potential reason for overpaying stamp duty is an inaccuracy with HMRC’s online stamp duty calculator. The calculator, available on the Revenue and Customs website, is designed to assist in determining the amount owed. However, recent revelations indicate that the calculator may not always provide accurate results.

    HMRC clarified that the online tool is intended for guidance purposes only. Nevertheless, many solicitors relied on it for final calculations, potentially leading to overpayment. It is estimated that as many as one in six buyers may have overpaid, although the government disputes this figure and maintains that the majority pay the correct amount.

    If your property is considered “mixed-use” or includes an annexe, you could be among those affected by this issue. If you suspect you may have been overcharged, it is advisable to reach out to your conveyancer or the Law Society for further guidance. They can assess your situation and determine if you have grounds for a stamp duty refund claim. Stay proactive and ensure your stamp duty payment aligns with the accurate calculation for your specific property.

    What is the stamp duty refund procedure?

    The stamp duty refund process is relatively simple and can be completed online or through postal submission. While hiring a solicitor is an option, you can handle the claim yourself if you prefer.

    It’s important to be cautious of companies offering “no win, no fee” solutions for stamp duty refunds. While enticing, these companies often charge high percentage rates if your claim is successful, resulting in significant costs on your part.

    Consider the best approach for your situation, whether it involves seeking professional assistance or proceeding independently. By being well-informed and vigilant, you can navigate the stamp duty refund process effectively and avoid unnecessary expenses.

    How long does a stamp duty refund take?

    Once you submit all the necessary information to HMRC, your stamp duty refund claim should be processed within 15 days. If, for some reason, your claim is not settled within this timeframe, you may be eligible to receive interest on the refund amount. However, it’s important to note that filing for compensation is not an option in such cases.

    Ensure that you provide HMRC with all the required details promptly, allowing for a smooth and timely processing of your stamp duty refund claim.

    Need more help with your stamp duty refund?

    Maximise your stamp duty refunds today by partnering with Tax Natives. Don’t miss out on potential savings and the expertise of our trusted UK tax advisers.

    Contact Tax Natives now to unlock the full potential of your stamp duty refund opportunities.

    Guide to Stamp Duty on Second Homes

    When purchasing an additional residential property or acquiring a second home, it’s important to be aware of the additional stamp duty obligations. If the property’s value exceeds £40,000, the extra rate for second homes typically applies.

    Even if you already own a property abroad or only possess a share in a property, the extra stamp duty still needs to be paid. Stay informed about these regulations when expanding your property portfolio.

    What counts as a second home?

    The concept of a second home can be ambiguous, so it’s crucial to define its qualifications clearly. Essentially, a second home refers to any property you acquire in addition to the one you already own. This can include:

    Being aware of these distinctions helps ensure a comprehensive understanding of second homes and their implications.

    How much is stamp duty for second homes?

    Stamp duty rates vary based on the location of your property purchase. Whether you are buying in England & Northern Ireland, Wales, or Scotland, different rates apply. It’s important to note that non-UK residents will also incur a 2% surcharge starting from 1st April, 2021.

    Specifically, let’s explore the stamp duty rates in England and Northern Ireland:

    Up to £250,0000%3%
    £250,001 to £925,0005%8%
    £925,001 to £1.5 million10%13%
    Over £1.5 million12%15%

    How much is stamp duty in Scotland?

    LBTT rates in Scotland:

    Up to £145,0000%4%
    £145,001 to £250,0002%6%
    £250,001 to £325,0005%9%
    £325,000 to £750,00010%14%
    Over £750,00012%16%

    How much is stamp duty in Wales?

    Up to £180,0000%4%
    £180,001 up to £250,0003.5%7.5%
    £250,001 to £400,0005%9%
    £400,001 to £750,0007.5%11.5%
    £750,001 to £1.5m10%14%
    Over £1.5m12%16%

    Inheriting a Second Property and Stamp Duty Implications

    The amount you inherit plays a role in determining your stamp duty obligations. If you become the sole owner of a property through inheritance, you are subject to the additional stamp duty when purchasing another property.

    However, if you inherit a share of a property, you may qualify for an exemption. Legislation states that if you inherit 50% or less of a property and purchase a residential property within three years, you are not required to pay the additional 3% stamp duty. It’s important to understand these rules and consult with professionals to navigate your specific circumstances.

    Can I claim back my second home Stamp Duty?

    When buying a second home, you typically pay a higher rate of Stamp Duty. However, there are circumstances where you can claim a refund. In England and Northern Ireland, if you have sold your previous main home, you can apply for a refund on the additional 3% Stamp Duty paid.

    One common scenario is when you purchase a new home before selling your old one, resulting in the ownership of two properties. The original home is considered your main residence, while the new home is treated as an additional property, subject to the higher Stamp Duty rate.

    Once you sell your original home and the new property becomes your main residence, it is no longer subject to the higher Stamp Duty rate. You may be eligible to claim a refund within three years of the purchase.

    Please note that the rules vary depending on whether your property was sold before or after 28th October 2018. To learn more about second home stamp duty rates, consult our comprehensive guide.

    What properties are excluded from the stamp duty for second homes?

    While purchasing a second home usually incurs higher stamp duty rates, there are a few cases where you may be exempt:

    1. Properties valued below £40,000.
    2. Purchase of caravans, mobile homes, or houseboats, regardless of their price.
    3. Buying a new home that replaces your current main residence, provided you sell the previous main home at the same time as the new purchase.

    In these instances, you may not have to pay the additional stamp duty rate. However, it’s important to review the specific criteria and regulations to determine eligibility.

    Do I have to pay if I’m a first-time buyer?

    If you don’t currently own any property and choose to buy a buy-to-let property, you won’t be subject to the stamp duty rates for second homes. Instead, normal stamp duty rates will apply since you will only own one property. It’s important to note that first-time buyer relief cannot be claimed for buy-to-let properties.

    However, you will be liable to pay stamp duty if:

    1. You have a shared ownership in another property.
    2. You have inherited a property.
    3. You are purchasing the property jointly with someone who already owns a property.

    In these cases, the stamp duty rates for second homes will apply. It’s recommended to review the specific regulations and seek professional advice to ensure compliance with stamp duty obligations.

    What if I plan to live in the property I’m buying?

    The rules surrounding Stamp Duty can become intricate in certain situations. Here’s what you need to know:

    If you require clarification or assistance, reach out to HMRC at 0300 200 3510. It’s advisable to seek professional advice to ensure compliance with Stamp Duty regulations.

    What is a main residence?

    Unlike other taxes, you don’t have the flexibility to choose which property is considered your main residence for stamp duty purposes. Here’s how HMRC determines your main residence:

    These factors help HMRC determine your main residence when you spend time at multiple properties. It’s essential to understand how HMRC defines your main residence to ensure compliance with stamp duty regulations. Seek professional advice for personalised guidance.

    What if I own property abroad?

    Even if your only other property is located abroad, you are still subject to the 3% additional stamp duty when purchasing a property in the UK. This means that owning a holiday home in Greece or a timeshare in Gran Canaria will result in paying the stamp duty for second homes rate, even if you are buying your first home in the UK. It’s important to be aware of this requirement when calculating your stamp duty obligations. Seek professional advice to ensure compliance with stamp duty regulations.

    If a property is in my spouse’s name can we avoid the additional stamp duty rate?

    When it comes to stamp duty, HMRC treats married couples or civil partners as a single entity. This means that if one partner owns a buy-to-let property and the other partner purchases a property, the second home stamp duty rate will still apply. This arrangement can become costly if the couple separates and one partner needs to purchase another home. It’s important to factor in these potential expenses and seek professional advice to navigate the stamp duty implications during such circumstances.

    I’m buying a property for my children. Will I have to pay the extra stamp duty?

    If your name is going to be on the deeds, and you own another property, then the 3% extra stamp duty applies. But, there are a few ways you can avoid it:

    Does the additional rate apply to leasehold extensions?

    When it comes to lease extensions, stamp duty applies just like any other property purchase. However, most people won’t have to pay it as it falls below the £125,000 threshold for standard stamp duty.

    The challenge arises with the stamp duty for second homes rate, which kicks in at a lower threshold of £40,000. If you pay more for the lease extension and own other properties, you’ll be subject to the additional stamp duty rate. However, if the lease extension is for your main residence, you are exempt from this additional stamp duty. It’s important to understand these rules and their implications when considering a lease extension.

    Optimising Your Stamp Duty Obligations for Second Homes

    Discover how Tax Natives can help you navigate the complexities of stamp duty when purchasing or selling a second home. Our experienced professionals can provide tailored guidance to ensure you optimise your tax obligations in the UK.

    Contact us today for expert assistance in managing your stamp duty concerns when purchasing a second or multiple properties in the UK.

    Buy-To-Let Stamp Duty Explained

    Determining the exact amount of stamp duty payable on a buy-to-let property can be complex, as it varies based on individual circumstances. In this article, we will break down the factors involved, enabling you to ascertain the applicable rate for your situation.

    If the additional financial burden of stamp duty poses challenges to your buy-to-let aspirations, we will also provide insights on seeking advice and specialised assistance tailored to your needs.

    (Note: All calculations adhere to the new rates for England and Northern Ireland, implemented on September 23rd, 2022).

    Empower yourself with the knowledge and guidance necessary to navigate the intricacies of stamp duty for buy-to-let investments. Make informed decisions and explore avenues that can help you overcome potential hurdles along the way.

    How much is stamp duty on buy-to-let properties?

    Calculating stamp duty for buy-to-let properties involves several factors, making it important to grasp the applicable rates based on your circumstances.

    Standard SDLT rates for residential buy-to-let properties in England and Northern Ireland, as of September 2022, range from 0% on the first £250,000 of the property value to 12% on amounts exceeding £1.5 million.

    However, different rates apply if you meet the following criteria:

    Owning more than one property:

    If your property purchase leads to multiple property ownership, a 3% Determining the exact amount of stamp duty payable on a buy-to-let property can be complex surcharge applies. For instance, rates begin at 3% on the property value up to £250,000, increasing to 15% on amounts above £1.5 million. Compared to a buyer without additional properties, this results in a significantly higher stamp duty payment.

    Non-UK residents:

    Non-UK residents, who have spent over 182 days outside the UK in the 12 months before the property purchase, face an additional 2% surcharge. Therefore, overseas investors with at least one other property are subject to rates such as 5% on the first £250,000, 10% on the next £675,000, 15% on the following £575,000, and 17% on amounts exceeding £1.5 million.

    First-time buyers:

    Although it is uncommon for first-time buyers to pursue buy-to-let properties, those who do enjoy the same SDLT relief as any other first-time buyer. If you’re a UK resident purchasing a property valued below £625,000, the applicable rates are 0% on the first £425,000 and 5% on the next £200,000.
    Understanding the nuances of stamp duty for buy-to-let properties is crucial for informed decision-making. Take advantage of this knowledge and explore options that align with your investment goals.

    How does this differ for buy-to-lets in Scotland and Wales?

    When it comes to buy-to-let properties, different tax schemes apply in Scotland and Wales. Let’s explore the key details and rates specific to each region.

    Scotland – Land and Buildings Transaction Tax (LBTT):

    LBTT is the tax payable on property purchases in Scotland, and it includes higher rates for additional properties, which typically encompass most buy-to-lets. The rates for LBTT and LBTT+ADS (Additional Dwelling Supplement) are as follows:

    Property valueLBTTLBTT+ADS
    Up to £145,0000%3%
    Over £750,00012%15%

    Wales – Land Transaction Tax (LTT):

    In Wales, the tax payable on property purchases is called Land Transaction Tax (LTT). Similar to the other regions, higher rates apply to additional properties. The rates for LTT and LTT+ADS are as follows:

    Property valueLBTTLBTT+ADS
    Up to £180,0000%4%
    £750,001-£1.5 million10%14%
    Over £1.5 million12%16%

    Understanding the specific rates and regulations for buy-to-let properties in Scotland and Wales is crucial for accurate financial planning. Be sure to consult with relevant authorities or seek professional advice to ensure compliance with the respective tax schemes.

    Can you add stamp duty to a buy-to-let mortgage?

    Adding stamp duty to a buy-to-let mortgage is a topic of interest for many investors. However, it’s important to understand the implications and challenges associated with this approach.

    Deposit Requirements and Loan-to-Value (LTV) Ratio:

    Buy-to-let mortgages typically require a substantial deposit, usually around 20-25% of the property value. Lenders set a maximum loan-to-value (LTV) ratio of 75-80%. For instance, if you aim to purchase a £300,000 property, you would need a minimum cash deposit of £60,000 and secure a mortgage for the remaining £240,000.

    The Challenge of Including Stamp Duty in the Mortgage:

    Adding the stamp duty cost, such as the £11,500 in our previous example, to the mortgage amount would increase the borrowing requirement to almost 85% of the property value. Securing approval for such a high LTV loan can be difficult, as only a limited number of lenders are currently willing to consider applications at this level.

    Considering Feasible Options:

    Given the financing constraints, it is advisable to carefully evaluate your financial situation and explore alternative solutions. These may include seeking additional funding sources, adjusting your investment strategy, or seeking professional advice to optimise your buy-to-let investment.

    Are there any stamp duty exemptions for buy-to-let?

    When it comes to buy-to-let properties, there are no stamp duty exemptions specific to this type of investment. However, you can still benefit from existing exemptions and reliefs available for all property purchases. Let’s explore some of the key options:

    1. First-time buyer relief: If you’re a first-time buyer, you may be eligible for stamp duty relief, which can reduce or eliminate the tax payable on your property purchase.
    2. Multiple dwelling relief: This relief is applicable when purchasing multiple properties in a single transaction, offering a way to lower the overall stamp duty liability.
    3. Relief for charities: Charities enjoy a complete exemption from paying stamp duty, providing a significant advantage when acquiring properties for their charitable purposes.
    4. Relief for Crown servants and their partners: Crown servants and their spouses or civil partners can be exempted from the non-UK resident surcharge, enabling them to pay the same stamp duty as UK residents.

    These exemptions and reliefs provide opportunities to minimise your stamp duty costs. However, it’s crucial to consult with professionals and understand the specific eligibility criteria and requirements associated with each relief.

    When do I have to pay buy-to-let stamp duty?

    When purchasing a property, it’s important to be aware of the stamp duty payment deadline. In most cases, you are required to settle the stamp duty amount within 30 days of buying the property. Here’s how the process typically works:

    Adhering to the stamp duty deadline ensures compliance with the tax regulations and avoids any potential penalties or complications. It is recommended to work closely with your solicitor throughout the buying process to ensure a smooth and timely payment of stamp duty.

    Remember, failing to meet the stamp duty deadline can have consequences, so it’s crucial to stay informed and proactive to fulfill this financial obligation within the specified timeframe.

    What counts as a ‘main residence’ for stamp duty purposes?

    Determining your “main residence” is based on various factors assessed by HMRC. These factors include your work location, your children’s school, and your voter registration. HMRC considers your main residence to be the place where you and your family primarily reside.

    What if my main home is abroad?

    If you own a property overseas and plan to purchase an investment property in the UK, you will still be subject to the additional stamp duty rate.

    I’ve split up with my partner but my name is still on the deeds. Will I need to pay the extra stamp duty when I buy a new house?

    Initially, yes, you will have to pay the 3% surcharge when purchasing a new house while your name is still on the deeds of the old property. However, you can claim this surcharge back if you sell your share in the previous property within 36 months.

    What happens with paying stamp duty as a limited company?

    There are no stamp duty exemptions for purchasing a buy-to-let property as a limited company. If you already own a buy-to-let property and choose to form a limited company, you will essentially have to pay stamp duty again as you will need to transfer the property to your limited company.

    Get Expert Help with Buy-to-Let Stamp Duty – Contact Tax Natives Today

    Looking to navigate the complexities of stamp duty when purchasing a buy-to-let property? Seek professional guidance and ensure you make informed decisions. Contact Tax Natives today for expert advice and assistance in understanding and managing your property tax obligations in the UK. Let us help you make the most of your buy-to-let investments.

    How much tax do I need to pay on rental income?

    Renting out property in the UK comes with tax obligations that can be complex to navigate. Understanding the calculations and reliefs applicable to your specific type of property is crucial to avoid any surprises. Stay informed and ensure compliance by considering these key factors when it comes to paying tax on your rental income.

    And consult Tax Natives for expert guidance and maximise your rental income benefits. Start optimising your tax strategy today with Tax Natives.

    Do you have to pay income tax on rental income?

    When it comes to rental income, it’s important to consider more than just the rent you receive. Additional earnings from services or deductions like deposit retention contribute to your total rental income. For example:

    When to declare tax on rental income?

    Great news! As a personal property owner renting out your property, you have a £1,000 property allowance, which means you can receive that amount of income tax-free without declaring it to HMRC (HM Revenue & Customs).

    However, if your rental earnings, after allowable expenses, fall between £1,000 and £2,500, you should inform HMRC directly. They might be able to collect the tax owed through the PAYE system. Income exceeding £2,500 must be declared on a Self-Assessment tax return.

    How much rent is taxable?

    You are only taxed on the profit you make from renting out your property, which is your total rental income minus allowable expenses.

    Allowable expenses typically include maintenance and management costs for your property, such as letting agent fees, landlord insurance, repairs, utility bills, council tax, and services like cleaning and gardening.

    If you own multiple rental properties in the UK, you can combine all your allowable expenses.

    Depending on the type of property you own, you may be eligible for specific tax reliefs. For example, if you rent out residential property or a furnished holiday let, you can claim “replacement of domestic items relief” to cover the cost of replacing items you provide, like sofas, curtains, and carpets.

    If you own a holiday let, you can also deduct capital expenses for equipment necessary to run your rental, such as air conditioning and CCTV.

    Commercial property owners can benefit from capital expenses for assets like lifts, escalators, and electrical systems.

    How much tax will I have to pay on my rental income?

    Tax rates in the UK are determined by income bands. There are four bands:

    Keep in mind that rental income can push you into a higher tax band. For example:

    Starting from April 2023, the basic rate of tax will be 19%, and the additional rate of 45% will be eliminated.

    Can I still get buy-to-let mortgage tax relief?

    As of April 2020, mortgage tax relief for rental properties has been phased out. You can no longer deduct mortgage interest from your rental earnings. Instead, you will receive a 20% tax credit.

    Do I have to pay National Insurance payments if I run a property business?

    If your property rental business generates profits exceeding £6,725, you must pay Class 2 National Insurance. However, if your profits are below this threshold, you can choose to make voluntary National Insurance payments, which will allow you to claim the full State Pension.

    To be classified as running a property business, you must meet all three of these conditions:

    When do I pay tax on rental income?

    You’ll need to pay Tax must be paid on the profits you earn during each financial year, which runs from 6 April to 5 April of the following year.

    If you choose to complete a paper Self-Assessment tax return, it must be submitted by 31 October of the subsequent financial year. Online assessments, on the other hand, have a submission deadline of 31 January. For instance, paper returns for the year 2021-2022 should be submitted by 31 October 2022, while online submissions can be made until 31 January 2023.

    Completing a tax return for rental income

    To ensure compliance with tax regulations, it is important to inform HMRC about any rental income by 5 October following the end of the tax year (5 April). If you earn money from renting out property, you will likely need to complete a self-assessment tax return.

    The deadline for paper tax returns is 31 October, while for online returns, it is 31 January of the following year.

    For individuals with a total income from UK property of £10,000 or more (before expenses), completing the main tax return is necessary.

    If your rental income exceeds £2,500 (after deducting rental expenses), you are also required to complete a tax return.

    However, if your rental income is under £2,500, HMRC may be able to collect the tax through the PAYE system if you already pay tax through sources such as your salary or pension. Contact HMRC for further information.

    Declaring losses on rental income

    Losses from rental properties in the UK can be carried forward to offset against future profits from your UK properties. For example, if you had rental income of £8,000 in the 2022-23 tax year but claimable expenses worth £10,000, you would have a loss of £2,000 for that year.

    However, you cannot use this loss to reduce your tax bill from other sources of income, such as dividends or pension income for that year.

    Instead, in the following tax year (2023-24), if you made rental profits of £5,000, you could deduct the previous year’s loss of £2,000. This means you would only owe tax on rental profits of £3,000.

    Paying tax when you sell a rental property

    When you sell a property that you have been renting, you will usually be subject to capital gains tax (CGT). Different rules apply if the property has been your home at any point.

    For properties that are not your main residence, the sale is treated similarly to any other asset sale. As a basic-rate taxpayer, you’ll pay 18% CGT, while higher or additional-rate taxpayers will pay 28% CGT.

    Between 6 April 2020 and 26 October 2021, there was a 30-day window to pay your CGT bill for property sales. However, after 26 October 2021, the deadline for reporting and paying CGT on the property is extended to 60 days.

    Take Control of Your Rental Income Taxes Today

    Navigating the tax obligations associated with rental income in the UK can be complex. To ensure compliance and maximise your financial benefits, it is essential to have a clear understanding of the calculations, reliefs, and deadlines that apply to your specific situation.

    Don’t leave it to chance—seek the guidance of a tax professional who can provide expert advice tailored to your needs. Start optimising your UK tax strategy with Tax Natives today and gain confidence in managing your rental income.

    Unlocking the Potential of Commercial Property Investments: Essential Tax Considerations

    Investing in commercial property may seem intimidating at first, but with the right information and advice, it can offer lucrative opportunities. Unlike residential properties, commercial properties, including student and hotel accommodations, have distinct tax implications.

    Understanding these differences is crucial for maximising the advantages they offer to investors. This comprehensive guide highlights key tax considerations that should be taken into account when venturing into commercial property investments.

    Stamp Duty Land Tax

    Just like residential properties, the purchase of commercial property attracts Stamp Duty Land Tax (SDLT), which must be paid within 14 days of completing the sale. There are no additional rates for subsequent purchases or if you already own residential property.

    Commercial property SDLT rates

    The SDLT rates for commercial property are as follows:

    Property ValueStamp Duty Land Tax Rate
    Up to £150,000Zero
    £150,001 – £250,0002%
    Any portion above £250,0005%
    *Property (or lease premium or transfer value) SDLT rate from 1 October 2021

    When it comes to income derived from letting commercial property, taxation applies. Valid revenue expenses, including letting agents’ fees and loan interest, can be deducted. The specific tax rates depend on the structure of the purchase and whether it is held by an individual, a trust, or a company.


    When it comes to the sale of commercial property, VAT regulations play a significant role. While commercial property sales are generally exempt from VAT, property owners have the option to charge VAT at the standard rate of 20%. This decision would extend the VAT charge to all associated supplies, including rent.

    New commercial properties, those less than three years old, are subject to VAT at the standard rate. However, student accommodation, including halls of residence, is exempt from VAT, provided the necessary certification requirements are met.

    In the case of hotel accommodation, VAT is typically applicable unless a long lease is granted for another party to operate it as a hotel business, or the property has opted to tax. Investors looking to purchase hotel rooms or suites for investment purposes should expect this arrangement to be in place.

    Given the complexity of VAT matters, seeking professional advice is highly recommended when navigating commercial property purchases.

    The Tax Benefits of Commercial Property Investment

    When it comes to commercial property investment, choosing the right legal structure is a significant decision for property investors. There are four main ways to invest:

    Each option carries different tax implications that can have a significant impact. Let’s briefly examine the tax considerations associated with each option.

    1. Holding property personally

    Most investors prefer to buy commercial property directly in their own name, as it offers certain advantages. One significant benefit is the potential eligibility for special capital gains tax treatment when selling the property.

    This treatment, known as “business asset taper relief,” allows for three-quarters of profits to be tax-free after just two years. It serves as an excellent capital gains tax shelter, with a maximum tax rate of 10% and potentially even lower rates thanks to the annual capital gains tax exemption.

    However, there is a limitation to qualify for business taper relief. If the property is let to a quoted (stock exchange listed) company like Vodafone, you won’t be eligible. While it may seem appealing to have a reliable tenant like a large brand, this choice would result in the less favourable non-business asset taper relief. This relief only exempts 5% of profits after three years and 40% after a decade.

    When it comes to rental income, there are no concessions. Income tax rates of 22% or 40% apply, depending on whether you’re a basic-rate or higher-rate taxpayer. Therefore, alternative investment strategies should be considered if protecting rental income is a priority.

    While minimising taxes is important, it’s equally crucial to focus on generating profitable returns. Finding the right balance between tax optimisation and income generation is key for successful commercial property investment.

    2. Holding property in a limited company

    Using companies as a legal structure for property investment has gained popularity due to lower corporation tax rates compared to personal tax rates. If you choose to invest through a company, your tax implications may differ from those of a personal investor.

    With rental income, you can benefit from lower tax rates, even as low as 0%. For instance, if you earn £15,000 in rental profits, the first £10,000 will be tax-free, and the remaining £5,000 will be taxed at 23.75%, resulting in an effective tax rate of just 8%.

    However, it’s important to consider that companies don’t qualify for the generous business taper relief available to direct investors when selling property. Instead, companies are eligible for an indexation allowance, protecting against tax on inflationary profits, typically around 3% per year.

    If you sell shares in the company rather than the property itself, you may personally qualify for taper relief, albeit at reduced non-business taper rates.

    Investing through an ISA or self-invested personal pension plan (SIPP) offers a potential escape from income tax, capital gains tax, and corporation tax.

    3. Using an ISA

    Currently, you can invest up to £7,000 per tax year in an ISA and enjoy tax-free profits on your investments, exempt from both income tax and capital gains tax.

    However, it’s important to note that ISAs typically do not allow investments in property. There are a few exceptions to this rule.

    4. Using a Self-invested Personal Pension

    To have more investment choices and flexibility, consider purchasing commercial property through a self-invested personal pension (SIPP) instead of ISAs.

    Investing through a SIPP offers several advantages. Firstly, you can benefit from tax-free rental income and capital gains, as no income tax or capital gains tax is payable on your SIPP investments.

    Additionally, you receive tax relief on any contributions made to your pension account. This means you can effectively purchase property at a discounted rate of 40%.

    Business owners particularly find commercial property SIPPs appealing, using them to acquire premises for their companies. The company would then pay rent to the SIPP, allowing it to claim the expense as a tax deduction, while the SIPP itself would be exempt from tax on the rental income received.

    Capital Gains Tax

    When selling a commercial property personally, you will be subject to Capital Gains Tax (CGT) on the increase in property value. For properties held in a limited company, Corporation Tax applies to annual company profits. CGT rates for commercial property are lower than residential rates, with 10% for basic rate taxpayers (18% for residential) and 20% for higher rate taxpayers (28% for residential).

    You only pay tax on gains exceeding the tax-free allowance, currently set at £12,300 (Annual Exempt Amount). Additionally, certain expenses can be deducted, including Stamp Duty Land Tax and allowable purchase and disposal fees.

    Capital Allowances

    Capital Allowance Relief can be claimed on moveable plant and machinery purchases for commercial properties.

    However, it is often overlooked that Capital Allowances can also be claimed for fixtures within a commercial property.

    These fixtures include cranes, fire alarms, security systems, heating and air conditioning systems, lifts, escalators, moving walkways, sanitary and kitchen equipment, and sprinkler systems.

    Until 31 December 2021, there is a temporary provision for 100% tax relief under the Annual Investment Allowance rules for the first £1 million of capital expenditure (which will then decrease to £200,000).

    When purchasing a property, it is possible to allocate a percentage of the purchase price to these items, potentially up to 25% of the original purchase and refurbishment price in some cases. This allocation can be used to offset future profits, resulting in several years of not declaring taxable profit. To benefit from this, it is crucial to document it as part of the purchase agreement.

    Super Deduction Tax Relief

    The Budget 2021 introduced a new 130% Super-deduction First Year Allowance (FYA) that provides an additional one-third reduction in tax for expenditure on new main pool plant and machinery. Initially available only for trading companies, an amendment to the Finance Bill now allows landlords and investors to claim this Super deduction tax relief for qualifying plant and machinery.

    Furthermore, the 50% Special Rate First Year Allowance (SR allowance) offers eight times more tax relief compared to the previous 6% writing down allowance (WDA) for various other plant and machinery assets.

    These enhanced reliefs present an attractive opportunity for landlords, as there is no upper limit to their application.

    Make The Most of Your Commercial Property Investments with Tax Natives

    Ready to optimise your UK tax obligations when investing in or selling commercial property?

    Look no further than Tax Natives. Our team of experts is here to guide you through the intricacies and help you explore the best strategies for maximising your tax benefits. Whether it’s deciding on the right ownership structure or navigating VAT considerations, our professionals have the knowledge and experience to assist you.

    Contact Tax Natives today to explore your options and ensure you make the most of your commercial property transactions.

    What taxes are paid by property owners in the UK?

    Are you considering a move to the UK and contemplating purchasing property? Investing in real estate is a smart strategy to safeguard your capital against inflation while potentially generating a steady income through rentals.

    However, before diving into the UK real estate market, it’s essential to understand the financial responsibilities that come with property ownership, including maintenance costs and taxes imposed by the state. Let’s explore the intricacies of property taxes in the UK.

    Is there property tax in the UK?

    Yes. Contrary to popular belief, British property owners are not entirely exempt from property taxes. While there may not be a traditional property tax, it’s crucial to remember that there are still other taxes that apply. Although these taxes go by different names, they are still closely tied to property ownership. Let’s delve into the realm of property taxation in the UK and uncover the full picture.

    What is the property tax rate in the UK?

    When it comes to property taxes in the UK, understanding the rates is crucial. In England and Northern Ireland, the Stamp Duty Land Tax (SDLT) for residential properties ranges from two to twelve percent. For properties valued at £255,000 and above, the tax rate applies. Non-residential freehold properties in this region also fall within the same two to twelve percent range, with a valuation threshold starting from £150,000 and exceeding £250,001.

    In Scotland, the Land and Buildings Transaction Tax (LBTT) applies to properties valued at £145,000 ($176,500) and above. The tax rate varies between two and twelve percent, with higher-valued properties, such as those exceeding £750,000 ($912,000), falling within this range.

    Meanwhile, in Wales, the Land Transaction Tax (LTT) applies to properties valued at £225,000 ($274,500) and above. The tax rate for such properties ranges from six to twelve percent, with those surpassing £1.5 million ($1.82 million) falling within this bracket.

    It’s essential to keep these regional variations in mind when considering property purchases, as tax rates can significantly impact the overall cost.

    How much tax do I have to pay on my property in the UK?

    When it comes to calculating your UK property tax, several factors come into play. To simplify the process, let’s break it down into five essential questions:

    1. What is the purchase price of your property?
    2. Where is your property situated?
    3. What are your intentions for the property?
    4. What type of ownership are you acquiring? Essentially, who holds ownership of the land where your property stands?
    5. Do you already own another property?

    By answering these questions, we can uncover the full spectrum of taxes and charges that may be applicable to your specific scenario. Whether you’re buying land, a house, a flat, or a commercial property in the UK, let’s explore the comprehensive breakdown of potential taxes and charges.

    1. Stamp Duty Land Tax

    When buying real estate in the UK, it’s essential to consider the stamp duty charged by the state at the time of purchase. Corporate buyers are subject to a fixed rate of 15%.

    For private owners, the stamp duty rate varies from 0 to 17%, depending on factors such as the purchase value, immigration status, and whether you already own another property. It’s worth noting that the UK government recently increased the stamp duty rate for foreign buyers by an additional 2%.

    Navigating the intricacies of stamp duty is vital to ensure a smooth property transaction.

    What are the stamp duty rates?

    To determine your stamp duty obligations accurately, refer to the table below:

    Purchase ValueBasic Rate (UK Nationals)Rates for Additional Properties (UK Nationals)Basic Rate (Foreign Buyers*)Rates for Additional Properties (Foreign Buyers*)
    Up to £125,0000%2%3%5%
    £125,001 – £250,0002%4%5%7%
    £250,001 – £925,0005%7%8%10%
    £925,001 – £1,500,00010%12%13%15%
    Over £1,500,00112%14%15%17%

    For first-time homebuyers, properties costing less than £300,000 are exempt from stamp duty. If the value exceeds £300,000 but doesn’t surpass £500,000, the initial £300,000 is untaxed, and the remaining amount is taxed at a reduced rate of only 5%. However, if the property value exceeds £500,000, the rates for additional properties apply.

    It’s worth exploring potential avenues for paying less or no stamp duty. Purchasing a freehold property, which includes the land and adjacent territory, may grant exemptions on certain portions. Consult a property expert to determine your eligibility for any reliefs or exemptions.

    Use this information as a guide to calculate your stamp duty accurately and consider seeking professional advice for a comprehensive understanding of your specific situation.

    2. Ground Rent

    When the land on which your house stands is owned by someone else, it falls under the category of leasehold ownership. This type of ownership typically incurs an additional charge known as ground rent, which averages between £50-£100 per year for residential properties.

    It’s important to consider these factors, as it is possible to purchase freehold properties in the UK, where both the land and the house belong to you. Understanding the distinction between leasehold and freehold ownership is crucial when making property decisions.

    3. Council Tax

    Council tax is another tax associated with properties in Great Britain, payable by the current occupants of a flat or house. If the property is rented, it is the tenants who are responsible for paying the council tax. This tax is collected by the local council and contributes to the maintenance of the surrounding area.

    Council tax rates vary based on the location and price range of similar properties. In Northern Ireland, rates may differ significantly, tailored to individual circumstances.

    All property owners or tenants who currently reside in a property are obligated to pay council tax, except for those temporarily vacating for refurbishment purposes. Students may be eligible for discounts on council tax.

    Understanding your obligations regarding council tax is important for property occupiers in Great Britain.

    Annual Tax on Enveloped Dwellings (ATED)

    The Annual Tax on Enveloped Dwellings (ATED) is an annual property tax paid by companies that own residential properties in the UK valued over £500,000. Typically, this tax is paid when submitting the tax return at the end of the financial year, usually in April.

    The amount of tax payable to the Treasury is determined based on the market value of the property at the time of purchase or, for properties held for an extended period, through revaluation every five years following the initial purchase.

    Understanding the ATED tax is essential for companies owning high-value residential properties in the UK, ensuring compliance with the tax obligations set forth by the government.

    Who is exempt from ATED?

    Certain entities, such as companies, partnerships, and investment funds, may be exempt from paying the ATED tax under the following circumstances:

    1. If a residential property is rented out to unrelated third parties.
    2. If the property is accessible to the public for at least 28 days annually.
    3. If the property is owned by a commercial company or agricultural enterprise and used as corporate accommodation for employees.

    While we have covered taxes directly linked to property purchase, ownership, and usage in the UK, it’s crucial to be aware of other taxes that may not be property-specific but still impact your obligations. These include taxes related to property sales, rentals, and inheritance.

    Understanding the wider scope of property-related taxes is essential for informed decision-making when it comes to selling, renting, or inheriting a property in the UK.

    5. Rental income tax

    Regardless of your tax residency status, any income earned on UK territory is subject to taxation. However, as a foreign national who has purchased a UK property for rental purposes and does not intend to relocate to the UK in the near future, you can leverage a double taxation treaty to avoid paying tax twice.

    How to declare your UK rental income tax:

    1. Declare all your income, including foreign income, in your tax return to determine your tax liability.
    2. Provide evidence of tax paid in the UK on income received within the country.
    3. In your home country, calculate income tax on your rental income, deduct the amount of tax already paid in the UK, and pay the remaining balance.

    By utilising double taxation treaties, you can mitigate the risk of being taxed twice on the same income, ensuring a fair and equitable taxation process across borders.

    How much property income is tax free in the UK?

    The first £1,000 of your income from property rental is completely tax-free? This is known as your ‘property allowance.’ Take advantage of this allowance to enjoy tax savings on your rental income.

    6. Capital Gains Tax

    In a stable economy, property prices tend to appreciate over time, and the UK is no exception. When selling your UK house or flat after a few years of ownership, you can anticipate earning a profit. However, it’s important to note that the UK government requires a portion of your earnings through capital gains tax (CGT), which is determined by the amount of capital gain.

    There are two applicable rates for CGT based on the difference between the purchase price and sale price:

    For individuals who have already become tax residents, CGT is paid after the end of the financial year, upon submitting a self-assessment tax return. However, non-residents and others must settle the tax within 30 days of the property purchase.

    It’s worth exploring various tax reliefs and exemptions that can help reduce the tax liability or potentially avoid paying CGT altogether. For instance, selling a property with limited square footage where you have primarily resided or gifting the property to your spouse may qualify for such benefits. Consulting with a tax professional can provide further guidance in optimising your tax obligations.

    7. Inheritance tax

    In the UK, if you inherit all or part of an estate from a deceased individual, you may become subject to inheritance tax. The standard inheritance tax rate is 40%, except for spouses of the deceased. However, if you received a gift, such as a flat, from a grandfather within 7 years of their passing, it will be treated as inheritance, subjecting you to an inheritance tax rate ranging from 8% to 40%.

    For heirs other than spouses, the tax-free allowance is the first £325,000 of the estate. Since 2017, direct heirs may be eligible for tax relief on inherited property where they have lived or used to live.

    Despite available allowances and reliefs, the inheritance tax rate in the UK remains significantly high. We strongly advise considering proactive measures to prepare and restructure your assets, even at a young age, to mitigate potential tax burdens. Seek professional advice to explore strategies tailored to your circumstances.

    Get professional help for your UK property tax obligations

    Are you feeling overwhelmed by the complexities of property taxes in the UK? Don’t fret! Tax Natives are here to help. Our team of experienced UK property tax consultants specialise in navigating the intricacies of property taxation, ensuring you understand your obligations and maximise available benefits.

    Let us guide you through the process, providing expert advice and tailored solutions to help you manage your property tax matters with confidence. Contact Tax Natives today and experience the peace of mind that comes from having trusted professionals by your side.

    Singapore stamps out property frenzy with increased taxes

    Singapore stamp duty increases Introduction

    Singapore announced significant increases in the Additional Buyer’s Stamp Duty (ABSD) rates effective from April 27, 2023. 

    This move comes after perceived successes of past moderating measures which were effective from December 16, 2021, and September 30, 2022, respectively.

    Increases in ABSD are targeted

    The increases in ABSD rates aim to prioritize Singapore citizens’ acquisition of homes for owner-occupation, dampen local and foreign investor demand for residential properties, and deter foreign investors from viewing local residential properties as an attractive investment class. 

    The ABSD rates for Singapore citizens and permanent residents have been increased by between 3% and 5% for purchases of their second and third residential properties.

    Foreign investors

    Meanwhile, foreign investors will have to pay twice the previous rate, with ABSD being raised from 30% to 60% for any residential property purchase. 

    Corporations, entities that are not housing developers, and trustees acquiring residential properties will also be subjected to ABSD, which has been increased from 35% to 65%.

    According to the Inland Revenue Authority of Singapore (IRAS), the following aspects of the buyer’s profile as at the date of purchase or acquisition of the residential property will determine the ABSD rate:

    Singapore stamp duty increases The new rates in full

    The new ABSD rates for acquisitions made on and after April 27, 2023, are as follows:

    Type of transactionRate of tax
    Singapore citizens buying first residential property0%
    Singapore citizens buying second residential property20% (3% increase from 17%)
    Singapore citizens buying third and subsequent residential property30% (5% increase from 25%) 
    Singapore permanent residents buying first residential property:5% 
    Singapore permanent residents buying second residential property30% (5% increase from 25%)
    Singapore permanent residents buying third and subsequent residential property35% (5% increase from 30%)
    Foreigners buying any residential property60% (30% increase from 30%) 
    Entities buying any residential property65% (30% increase from 35%) 
    Housing developers buying any residential property35% (non-remittable), plus additional 5% (non-remittable)
    Trustees buying any residential property65% (30% increase from 35%), effective from May 9, 2022 

    The IRAS has also set out a transitional provision whereby ABSD rates before April 27, 2023, will apply to buyers meeting the following conditions:

    The IRAS has indicated that it will not extend the deadlines in the ABSD transitional remission rules, even in cases where the validity period of the OTP extends beyond or commences after May 17, 2023.

    Will this prompt a slowdown?

    The ABSD increase may cause a slowdown in the real estate market as investors and buyers may be deterred by the higher stamp duty rates. 

    This could potentially affect developers who may face lower demand for their projects. 

    However, the government has stated that these measures are necessary to maintain a stable and sustainable property market in Singapore.

    Singapore stamp duty increases Conclusion

    In conclusion, the recent announcement by the Ministries of Finance and National Development, and the Monetary Authority of Singapore, to increase the Additional Buyer’s Stamp Duty (ABSD) rates, shows the Singaporean government’s commitment to maintaining a stable and sustainable property market. 

    The new ABSD rates, effective from 27 April 2023, aim to prioritize Singapore citizens acquiring homes for owner-occupation, pre-emptively dampen local and foreign investor demand for residential properties, and ensure that the Singapore property market remains affordable for its citizens. 

    It remains to be seen how these changes will affect the property market in the long run, but the government’s proactive approach to managing the market is a positive sign for Singapore’s future economic stability.

    If you have any queries relating to Singapore stamp duty increases , or Singaporean tax matters more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    Underused Housing Tax

    Underused Housing Tax – Introduction

    The Underused Housing Tax Act (UHT Act) came into effect on January 1, 2022.

    It requires non-Canadian owners of residential properties in Canada to file an annual return and pay a 1% tax on the property’s value.

    In some cases, Canadian owners will also have obligations under the new rules.

    With the deadline for 2022 approaching on April 30, 2023, residential property owners should be aware of their filing requirements and potential tax liability.

    UHT Return Filing Requirements

    Owners of residential properties in Canada, excluding certain “excluded owners,” must file a UHT Return for each property annually, regardless of whether the UHT is payable.

    Residential properties include detached houses, semi-detached houses, rowhouses, and condominium units located in Canada.

    The UHT Return must be filed by April 30 of the following year, providing information on the property, ownership, and any applicable statutory exemptions.

    Defining “Owner”

    Under the UHT Act The UHT Act defines an owner as the registered owner, not the beneficial owner, of a residential property.

    This includes nominee or bare trustee corporations holding legal title for others.

    Owners also include life tenants, life lease holders, and those with continuous possession of land for at least 20 years under a long-term lease.

    Excluded Owners and UHT Exemptions

    Excluded owners, such as Canadian citizens and permanent residents (with some exceptions), publicly-traded Canadian corporations, and certain trusts, charities, and institutions, do not have to file a UHT Return or pay the UHT.

    Additionally, statutory exemptions may apply based on the type of owner, occupant, availability, and location and use of the property, rendering the UHT non-payable.

    Type of Owner Exemptions

    Exemptions are potentially available including:

    Individuals who died in the current or previous year, co-owners with a deceased owner, and those acquiring property ownership for the first time in the last nine years are also exempt, though they still need to file a UHT Return.

    Occupant Exemptions

    The UHT is not payable if the property is the primary residence of the owner, their family, or a tenant for at least 180 days in a calendar year.

    Non-Canadian owners with multiple residential properties may be exempt for one designated property.

    Availability Exemptions

    Properties unsuitable for year-round residence, inaccessible due to seasonal conditions, undergoing renovations for at least 120 consecutive days, or rendered uninhabitable due to natural disasters or hazardous conditions for at least 60 consecutive days may be exempt from the UHT.

    Newly constructed properties may also be exempt under certain conditions.

    Location and Use Exemptions

    Properties located in certain prescribed areas of Canada and used as a residence or lodging for at least 28 days during the calendar year may be exempt from the UHT.

    Calculating the Underused Housing Tax

    The UHT is calculated as 1% of the taxable value of the property, which is the greater of the assessed value or the most recent sale price before December 31.

    Alternatively, a person may elect to use the property’s fair market value, supported by a written appraisal.

    Penalties for Non-Compliance

    Failure to file the UHT Return can result in penalties ranging from CA$5,000 to CA$10,000 and additional amounts based on the UHT payable and the duration of non-compliance.

    Preventing Underused Housing Tax Avoidance

    The UHT Act includes an anti-avoidance rule to prevent people from exploiting the law to gain tax benefits, such as reducing, avoiding, or deferring the UHT.

    This rule applies if a transaction is deemed a misuse or abuse of the UHT Act.

    Generally, an avoidance transaction is one that results in a tax benefit but is not primarily carried out for genuine reasons other than obtaining the tax benefit.

    Quebec Private Law and Bijuralism Considerations

    The UHT Act takes into account specific aspects of Quebec private law, such as rent, ownership, and property.

    It is essential to be aware that the terminology and meaning of some Quebec property and civil rights rules in the Civil Code of Quebec may differ from common law.

    In these cases, it may be necessary to refer to Quebec provincial rules and concepts related to property and civil rights.

    Underused Housing Tax – Conclusion

    The deadline for 2022 reporting, on April 30 2023, is fast approaching.

    As such, residential property owners should make sure they are fully aware of their own filing requirements under the new rules and any potential tax liability.

    If you have any queries about the Underused Housing Act or other Canadian tax matters then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    Non-Resident Corporate Landlords in Ireland – house-keeping under the new regime

    Non-Resident Corporate Landlords in Ireland Introduction

    The Finance Act 2021 brought significant changes to the tax liability of non-resident companies renting out property in Ireland. 

    This article examines the impact of these changes on non-resident corporate landlords, provides guidance on the new tax regime, and discusses the steps non-Irish resident corporate landlords must take under the new legislation.

    Tax position before 2022

    Prior to the changes, non-resident corporate landlords were not subject to Irish corporation tax on Irish source rental income. An exception being where connected to a branch, agency, or permanent establishment in Ireland. 

    Instead, they paid Irish income tax at a 20% rate on taxable rental income.

    To collect taxes from non-resident landlords, tenants had to deduct withholding tax (20%) on rent payments, with an exception for landlords who appointed an Irish collection agent. 

    In this case, the agent took responsibility for filing and paying relevant Irish taxes on the letting.

    Tax position from 1 January 2022 onwards

    Starting in January 2022, non-resident corporate landlords now face a 25% Irish corporation tax rate on rental income, a 5% increase from before. 

    Additionally, new tax filing requirements were introduced for landlords and Irish collection agents.

    Collection agents must register for corporation tax under a separate tax reference number for each landlord, file the corporation tax return, and pay any due taxes. 

    Tenants must still deduct withholding tax on rent payments to non-resident landlords, unless an Irish collection agent is appointed.


    Although the treatment of expenses for landlords remains generally the same, some differences may arise under the corporate tax regime. 

    For example, interest deductions may now be restricted by deemed distribution rules or the new EU Anti-Tax Avoidance Directive interest limitation rule.

    Transitional rules will also apply, allowing for the carry forward of unused losses or excess capital allowances and ensuring that no benefit or loss occurs from the rate change from 20% to 25% concerning balancing allowances and charges after 1 January 2022.

    Capital Gains on sale

    The effective capital gains tax (CGT) rate for non-resident landlords selling (or otherwise disposing of) Irish property remains at 33%. 

    However, landlords now face corporation tax instead of CGT on property disposals, which are included in the corporation tax pay and file regime. 

    The tax rules on development land disposals remain unchanged, subject to the CGT pay and file requirements.

    Non-Resident Corporate Landlords in IrelandTax returns

    The corporation tax regime applies to profits or income earned from 1 January 2022. 

    Thus, regardless of a landlord’s financial year-end date, a new accounting period is deemed to begin on 1 January 2022. This means that landlords without a 31 December 2022 year-end date will likely have two corporation tax returns to file for income earned in 2022.

    Corporation tax returns must be filed by the 23rd of the ninth month after the end of the relevant accounting period. For example, for accounting periods ending on 31 December 2022, the filing due date is 23 September 2023. 

    The corporation tax liability must be paid in preliminary tax instalments during the accounting period, with a final instalment due on or before the corporation tax return filing date.

    Non-Resident Corporate Landlords in Ireland Conclusion

    The year 2022 will mark the first tax year in which non-resident corporate landlords are subject to the corporation tax regime. 

    Landlords will need to seek timely advice regarding their tax liability and their filing obligations to ensure compliance with the new system of tax.

    If you have any queries about the new Non-Resident Corporate Landlords in Ireland regime, or Irish tax matters more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article

    Los Angeles Mansion Tax: A case of Hollyblood?

    Los Angeles Mansion Tax – An introduction

    A new transfer tax, dubbed the “Mansion Tax,” came into effect on April 1, 2023, in the City of Los Angeles.

    This tax, approved by voters under Measure ULA, imposes a 5.5% tax on sales of high-value real estate.

    With the effective date now passed, the real estate market had been bustling, with parties attempting to finalise deals before the new tax took hold.

    The Mansion Tax in Context

    Currently, the documentary transfer tax rate in Los Angeles stands at $5.60 per $1,000 of value (0.56%).

    This tax is based on the net value, excluding any liens or encumbrances on the property at the time of transfer.

    The Mansion Tax, however, will be calculated on the gross value, inclusive of any liens or encumbrances.

    The tax imposes an additional 4% tax on properties valued between $5,000,000 and $9,999,999.99, and a 5.5% tax on properties worth $10,000,000 or more.

    The Mansion Tax’s Impact

    This new tax not only affects buyers and sellers of real estate but also have implications for rental property markets, potentially leading to rent increases.

    The tax applies to all types of real property sold in the City of Los Angeles, valued over $5,000,000, unless otherwise exempt. Exemptions include transfers to certain non-profit, affordable housing, and tax-exempt organizations.

    Recent Developments and Uncertainties

    On March 16, 2023, the City of Los Angeles released a list of FAQs to address general questions about the Mansion Tax.

    The FAQs introduced a calculator to determine the city transfer tax due, but it does not include the county tax, which must be added separately.

    Despite the FAQs, uncertainty remains in the marketplace. It is unclear whether the same city and state exemptions will apply to the Mansion Tax as they do for the current documentary transfer tax, and whether entity interest transfers resulting in a change of control will be subject to the Mansion Tax.

    It is anticipated that more guidance will be released by the City of Los Angeles.

    Legal Challenges and Potential Future Developments

    The validity of the Mansion Tax has been questioned in recent lawsuits, with opponents claiming it is an unlawful special tax that violates property owners’ equal protection rights.

    The City of Los Angeles filed a memorandum supporting a motion to dismiss on March 15, 2023. The outcome of these lawsuits, both federal and state, is uncertain. However, the Mansion Tax still came into effect on April 1, 2023.

    Furthermore, a ballot initiative called The Taxpayer Protection and Government Accountability Act could potentially end the Mansion Tax and similar measures.

    This act, expected to appear on the California ballot in 2024, would require two-thirds of voter approval for new local special tax increases and invalidate any tax increases adopted after January 1, 2022, that did not receive two-thirds voter approval. This would include the Mansion Tax, which was passed by a margin of approximately 58% to 42%. The act, as currently drafted, does not provide for tax refunds or rebates for amounts paid under invalidated taxes.


    The Mansion Tax has, and will continue to, significantly impact the real estate market in the City of Los Angeles, with effects on buyers, sellers, and rental property markets.

    If you have any queries about the Los Angeles Mansion Tax or other US tax matters then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.