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  1. #1
    Testimonial Due edinburghhibee's Avatar
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    Help with Land Building Transition Tax & Dwelling Supplement advice

    Hi folks,

    Just looking for any advice on the above. Iím having a bit of a nightmare just now. I own a property in Edinburgh. Have done for 10 years. I moved up to Fort William with work and have decided to buy a house up there.

    The house Iím looking to buy is £210k and Iím being told that Iíve to pay the above taxes which in total with the solicitors fees are coming to £10k extra on top of my deposit!!

    So my question is does anyone gave any advice on how to avoid this tax??? I personally think itís unfair that because I put my money into my flat at a youngish age rather than pissing it against a wall Iím being restricted in moving on.

    Any advice anyone can give would be welcome.

    Thanks in advance.


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  3. #2
    Quote Originally Posted by edinburghhibee View Post
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    Hi folks,

    Just looking for any advice on the above. Iím having a bit of a nightmare just now. I own a property in Edinburgh. Have done for 10 years. I moved up to Fort William with work and have decided to buy a house up there.

    The house Iím looking to buy is £210k and Iím being told that Iíve to pay the above taxes which in total with the solicitors fees are coming to £10k extra on top of my deposit!!

    So my question is does anyone gave any advice on how to avoid this tax??? I personally think itís unfair that because I put my money into my flat at a youngish age rather than pissing it against a wall Iím being restricted in moving on.

    Any advice anyone can give would be welcome.

    Thanks in advance.


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    https://www.revenue.scot/land-buildi...ement-examples

    Looks like selling your Edinburgh property would be the only way to avoid the Additional Dwelling supplement.

  4. #3
    Testimonial Due edinburghhibee's Avatar
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    Yeah I get that but Iíll lose just as much money as I get fined for leaving my fixed term contract as Iím still in the first year. So itís not worth it.

    Plus that flat is my pension for when Iím older, itís an investment. Just feel itís really unfair.

    Thanks for your reply tho!!


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  5. #4
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    Quote Originally Posted by edinburghhibee View Post
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    Yeah I get that but Iíll lose just as much money as I get fined for leaving my fixed term contract as Iím still in the first year. So itís not worth it.

    Plus that flat is my pension for when Iím older, itís an investment. Just feel itís really unfair.

    Thanks for your reply tho!!


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    Whatever you do don't sell your Edinburgh property. The growth will be taking a £10000 hit but you probably have made a paper profit already.

    When you come to sell that property you will be quids in and own a second home too.

    Do you rent out the Edinburgh property?

  6. #5
    Testimonial Due edinburghhibee's Avatar
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    Yeah Iíve been out the flat for 7 years so itís now on a BTL mortgage. To be honest I have no interest in selling it as Iíve managed to get it down to only 11 years left to pay.

    I do rent it out at the moment. But I only charge the mortgage fee I even have to put £100 to the mortgage every month but I donít mind as like I say itís an investment.

    Just hacked off with this land tax as itís not as if Iím leaving an apartment empty! Which from reading up on it this tax is to stop that from happening


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  7. #6
    Promising Youngster Lucky_Jim's Avatar
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    Quote Originally Posted by edinburghhibee View Post
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    Hi folks,

    Just looking for any advice on the above. Iím having a bit of a nightmare just now. I own a property in Edinburgh. Have done for 10 years. I moved up to Fort William with work and have decided to buy a house up there.

    The house Iím looking to buy is £210k and Iím being told that Iíve to pay the above taxes which in total with the solicitors fees are coming to £10k extra on top of my deposit!!

    So my question is does anyone gave any advice on how to avoid this tax??? I personally think itís unfair that because I put my money into my flat at a youngish age rather than pissing it against a wall Iím being restricted in moving on.

    Any advice anyone can give would be welcome.

    Thanks in advance.


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    Sorry but your messages have really got my back up.

    Youíre not looking to ďmove onĒ as you say though, are you? Youíre looking to keep your current property and buy a second property, so why is it that you donít think itís fair to have this tax levied against you?

    The average age of first time buyers is at a record high not because, as you so pejoratively say, younger people are choosing to piss their money against the wall. Rather two decades of rampant house price inflation, coupled with stagnating wages has meant that many many more young people face years of being locked out of home ownership and stuck with paying rising rates of rent for longer, if not indefinitely. IMO successive governments have failed massively on this agenda and allowed vested interests to inform policy and fiscal decision-making that has created this mess. However, I also blame individuals - people who view property as easy Ďinvestmentí and not as homes and as a social issue.

    People who own more than one home are a big contributing factor to the current housing crisis. The unfairness is with those who are stuck living with their parents for years longer than either party would wish or paying off the mortgage on other peopleís houses when they would dearly love to have a mortgage of their own. Thereís absolutely nothing unfair about the government levying an additional tax on those buying second (or third etc.) homes that those with only one property donít pay. In fact itís the very definition of progressive and fair.

    So sorry but I strongly disagree with your sense of unfairness.

  8. #7
    Testimonial Due edinburghhibee's Avatar
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    Nae bother cheers for your input


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  9. #8
    @hibs.net private member danhibees1875's Avatar
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    There's a bit of tax to pay, and I'm not aware of any way round it. I believe selling your original property within a year gets you out of it, but that's not a solution that would seem to suit you.

    LBTT is just the new Stamp duty and ADS just adds a bit on for those who already own a property. I appreciate your situation isn't exactly what they would be trying to penalise, but given the difficulty people have getting onto the housing market it's not unreasonable that they add a bit extra tax on to those who already have property.
    Mon the Hibs.

  10. #9
    Promising Youngster Lucky_Jim's Avatar
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    Quote Originally Posted by edinburghhibee View Post
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    Nae bother cheers for your input


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    Nae bother, you're welcome. Hope you recover from your 'nightmare' of having to pay your fair share of tax. I'm sure the money rolling in from your property empire will help soften the blow.

  11. #10
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    Might be better to try Kickback or Follow Follow if it's tax avoidance advice you're looking for.

  12. #11
    @hibs.net private member easty's Avatar
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    Mate...you've pissed plenty money up the wall!

  13. #12
    Testimonial Due edinburghhibee's Avatar
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    Quote Originally Posted by danhibees1875 View Post
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    There's a bit of tax to pay, and I'm not aware of any way round it. I believe selling your original property within a year gets you out of it, but that's not a solution that would seem to suit you.

    LBTT is just the new Stamp duty and ADS just adds a bit on for those who already own a property. I appreciate your situation isn't exactly what they would be trying to penalise, but given the difficulty people have getting onto the housing market it's not unreasonable that they add a bit extra tax on to those who already have property.
    Yeah I do get that, I also get Lucky Jimís point of view. My point was that most folk put money in a pension and instead I have this. Like I say I only charge what the mortgage costs I donít make and month to month profits however I know in the long run I will.

    I just think 4% plus the other fees and taxes is extreme.


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  14. #13
    Testimonial Due edinburghhibee's Avatar
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    Quote Originally Posted by easty View Post
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    Mate...you've pissed plenty money up the wall!
    Thatís plenty!!


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  15. #14
    @hibs.net private member easty's Avatar
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    Quote Originally Posted by edinburghhibee View Post
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    Yeah I do get that, I also get Lucky Jimís point of view. My point was that most folk put money in a pension and instead I have this. Like I say I only charge what the mortgage costs I donít make and month to month profits however I know in the long run I will.

    I just think 4% plus the other fees and taxes is extreme.


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    I've looked into this too, I'll prob want to move in the next couple of years to a bigger place. I'll have enough equity in this to take a chunk out as a deposit for the next place, but the LBTT will stop me I reckon. 4% is a lot when you're buying a house.

    I think it's targeting the wrong group of people to be honest, I'm obviously biased as it would affect me though.

  16. #15
    Testimonial Due edinburghhibee's Avatar
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    Quote Originally Posted by easty View Post
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    I've looked into this too, I'll prob want to move in the next couple of years to a bigger place. I'll have enough equity in this to take a chunk out as a deposit for the next place, but the LBTT will stop me I reckon. 4% is a lot when you're buying a house.

    I think it's targeting the wrong group of people to be honest, I'm obviously biased as it would affect me though.
    Thatís my point mate itís not like Iím gonna buy 3/4 properties no got nearly enough money for that. I read that I can encompass the tax in to my mortgage however thatís a no go with the bank.

    Never mind just gonna need to keep renting in Kinlochleven.


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  17. #16
    @hibs.net private member easty's Avatar
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    Quote Originally Posted by edinburghhibee View Post
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    Thatís my point mate itís not like Iím gonna buy 3/4 properties no got nearly enough money for that. I read that I can encompass the tax in to my mortgage however thatís a no go with the bank.

    Never mind just gonna need to keep renting in Kinlochleven
    .


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    Or get a job back down here?

  18. #17
    Testimonial Due edinburghhibee's Avatar
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    No way love it up here mate youíll need to come up for a visit mate been too long


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  19. #18
    @hibs.net private member easty's Avatar
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    Quote Originally Posted by edinburghhibee View Post
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    No way love it up here mate youíll need to come up for a visit mate been too long


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    Could do aye...I'll speak to Ando about coming up with him

  20. #19
    Testimonial Due edinburghhibee's Avatar
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    Good lad.


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  21. #20
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    You are an accidental landlord, like I was. I owned a flat in Edinburgh and met my current partner after 11 years of living there.

    I moved into her place and rented out my flat until I sold it 2 years ago. I never intended to be a landlord but when I was a was a very good landlord as I thoroughly believe

    that it is an obligation to look after tenants. These tenants paid my mortgage plus some and it was important to look after them.

    If you are lucky enough to buy a second property, then do it if you believe said property will increase in value in the long term, or are you happy to pay rent to a landlord as you receive

    yourself?

    You don't say your age but if you have 20 years or so to retirement I would seriously look into it.

  22. #21
    @hibs.net private member Future17's Avatar
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    Quote Originally Posted by edinburghhibee View Post
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    Hi folks,

    Just looking for any advice on the above. Iím having a bit of a nightmare just now. I own a property in Edinburgh. Have done for 10 years. I moved up to Fort William with work and have decided to buy a house up there.

    The house Iím looking to buy is £210k and Iím being told that Iíve to pay the above taxes which in total with the solicitors fees are coming to £10k extra on top of my deposit!!

    So my question is does anyone gave any advice on how to avoid this tax??? I personally think itís unfair that because I put my money into my flat at a youngish age rather than pissing it against a wall Iím being restricted in moving on.

    Any advice anyone can give would be welcome.

    Thanks in advance.


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    I'm not wanting to pile on here, or tell you what you probably already know, but the purpose of the ADS is primarily to help to address the lack of affordable housing in Scotland.

    You're not "restricted in moving on", as you have the option of selling your Edinburgh property if you're trying to move on to Fort William. By retaining your Edinburgh property, you're contributing to the problem which prevents other people who want to buy a house from "moving on". I don't think it penalises you for investing in a property when you were younger, as you will clearly have derived value from that (not least due to the appreciation in value during the time you have owned it); if you hadn't bought the property when you were younger, but wanted to own two properties now, you'd still have to pay ADS. Bottom line, I think it's extremely unlikely that the average person who didn't buy a property when you did would be in a better financial situation in your current circumstances.

    As other posters have alluded to, you need to weigh up the pros and cons (not just financially) for each prospective course of action. From a financial perspective, provided you can afford the initial outlay, the long-term benefit may be in keeping your current property when you buy a new one. Keep in mind that you have to pay LBTT and solicitors' fees on a new purchase irrespective of retaining your existing property, so the financial consideration in retaining your existing property is just the ADS (£8,400).

  23. #22
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    There was an interesting study recently that shed some light on why house prices have risen.

    Itís main conclusion that it actually had pretty much zip to do with people owing more than one home, the rate of new construction or any other thing that is popularly believed to be then root cause. It was almost entirely down to the cost of money.

    As real interest rates have fallen so house prices have risen. Effectively the cheaper it was to borrow the more people did borrow which drove the prices up over time.

    So effectively to lower house prices the answer is to raise interest rates. Which of course is hardly going to be popular or likely. That said as there is little room for mortgage rates to go any lower so there is a thought that actually house price inflation cycle may have largely run its course.

    There was also a few numbers flying about re residential property v stock markets. Again those were maybe not what some people believe and actually over the long term the total return from the global markets was higher than property returns.

    So the moral of this story is not to castigate the OP for having a second house as the reason for higher house prices, the BoE and itís forever low rates are much more likely to be at fault and actually the OP should take the capital available from his first house and stick it in a proper pension as the returns are likely to be higher!

    The above is of course all subject to challenge, investments can fall as well as rise and being an accidental landlord is a bit of a pain and is often not worth the hassle anyway!

  24. #23
    Testimonial Due edinburghhibee's Avatar
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    Thanks to everyone for their responses whether we agree or not.

    I should have made it clear the ďrestrictedĒ part of the OP was because before a change in family circumstance has forced me to reconsider I have only just gone into a new BTL mortgage on the flat. Now I always go fixed term so I know what Iím paying and the tenant knows they have that price fixed for that period. So to come out of that mortgage I would need to pay/loss money which is a pain.

    I can understand what people are saying about people struggling to afford housing but if you look online zoopla/rightmove whatever there are flats just like mine so as much as I understand some of you think my ďempireĒ of 1x one bedroom flat is robbing someone of a home itís really not.

    I will have to pay the extra tax thatís for certain if I want to keep my flat. But my partner is a first time buyer so why canít there be a discount? Why is it a blanket tax?

    To another poster who posted yeah it was basically an accidental landlord situation like you say. i left the flat fully furnished and if she reports an issue Iím onto it straight away I would hope Iím seen as a good landlord. In the 7 years Iíve had it Iíve only had it empty for 3 days and only had two tenants in that period so I think I am.


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