Tax on second property - Scotland

[tentonine]

I'm going back to Scotland and completely forgot about the tax on second homes.
I have a small flat - bought about 30 years ago which my parents live in. I'm looking for a house to buy - probably £400k ish and someone has just told me that I will need to pay tax because of my small flat.

Is that correct? How would the tax man ever know? I bought it so long ago. What can I do? (Small flat probably worth 90k)

sorry, that is a typo. House I will be looking to buy about £200k

Can't advise on the tax rules, but

How would the tax man ever know?

Ownership of residential property is a matter of public record. In Scotland, it would be in the Land Register.. I presume that in England, the Land Registry plays the equivalent rule. Even an interested private individual can access such information for a small fee. HMRC are certainly capable of doing so.

When you sign your agreement with the solicitor acting for your house purchase you will need to make a declaration that you do not own another property. If you lie, you will be in breach of contract.

HMRC have access to the land registry so in theory they can work it out.

If you are replacing a main residence then the purchase is exempt from the additional dwellings supplement. If not, the ADS will apply. Your solicitor should be able to keep you right.

https://revenue.scot/calculate-tax/calculate-property-transactions

Rules are here: https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-rules-particular-transactions-buyers

What tax is this? I know there's a council tax surcharge but is this another tax?

LBTT - stamp duty. You pay an extra 3% (?) on second property.

You do have to declare this to your solicitor and he has to act on it. Not declaring is tax fraud.

My DS is at uni and I am selling up the family home to buy a flat for him to stay in during his course. I don't want to put it in his name. I will need to buy a small place for me to stay in. We are only doing this due to the cost of rent in the uni city. I can't just give him a flat but I can't contribute to his housing costs any other way.

Sorry I was typing when your reply came in. Thanks for explaining it x

You will need to take LBTT into account for
both properties and think about the order you are going to purchase them in.

Also you will likely need to pay capital gains tax on the sale of the property your son is going to live in.

We are both getting studio flats but his will cost more due to the location. Mine will be under 50k. I don't think his will appreciate much in the years that he is there so hopefully not much CGT.

I am sorry OP for asking questions on your thread. I will start my own once I have read up a bit more.

Yes this is correct and the tax is worked out as a percentage of the second home purchased not the lower value of the two.

@tentonine From Apr 2024 double council tax is also payable on 2nd homes in Scotland in certain areas.

A second home with a purchase price of £200k is liable to £13100 in taxes.

I don't know about Scotland but in England you'd be paying Stamp Duty on a second home.

OK, thanks all. Understood.