~Second Home Tax~

[CostaMad]

DH and I are looking at buying a second home but want to know if you have to pay second home tax ~ does it make a difference if it's a holiday home or long term investment property? Is there a legal loophole that can void or reduce the taxes? We know the tax implications can differ from our main residence but not the finer details. It's all confusing! If used a (buy-to-let property) will we still need to pay the second home tax?

What do you mean by second home tax?
There isn't a tax called this.

If you mean the additional stamp duty to pay on a second property then no, it doesn't make a difference if it's a holiday let or long term investment. Unless you plan on selling your main residence to move into the second property within 3 years of purchase, then you can get a refund on the additional SDLT. If the second home is worth less than 40k or is mobile (caravan, boat etc) you don't pay either.

You will also need to check the individual council for council tax. Some offer payment holidays if the home isn't used year round, others charge double for periods over 2 months if it's empty.

You'll pay income tax (bearing in mind the usual allowances and rates) on income made from the second property.

You will also pay (subject to normal allowances) capital gains tax when you sell the property.

I would recommend you speak to an accountant to get this set up properly, especially if the second property will be mortgaged. A lot of people assume you can deduct mortgage payments from the rent before calculating profit but this is not true.