Will we be taxed if we buy next door?

House Beautiful (UK) - - Home Advice - PROP­ERTY FI­NANCE SPE­CIAL­IST Me­lanie Bien Money ex­pert and founder of Bien Me­dia

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.

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