Will we be taxed if we buy next door?
We want to extend our house and the small property next door has become available. It’s tempting to buy it so we could knock through and create one bigger house. But would it be regarded as a second home for tax purposes?
In order to ‘level the playing field’ between buy-to-let investors and first-time buyers, the Government recently introduced a number of measures, including a stamp duty surcharge of three per cent on second homes. While you intend to buy the property next door in order to knock your home through and make it bigger rather than as an investment, it’s likely that it will be considered a second home at the time of purchase and, as it counts as a second property, you’ll have to pay the higher stamp duty rate.
However, in this instance there may be a possibility of getting this refunded at a later date if you knock through the property within 36 months because you’re converting it into one home. You will need to seek advice from a solicitor to find out whether this is the case.