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james cockburn

Stamp duty on rental income?

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Hi everyone.

 

Just a small query about stamp duty. My wife is in the process of renting out her commercial property in Scotland and her solicitor has brought up the possibility of having to pay stamp duty on this. I have never heard of this but wondered if anyone could shed a bit of light on the subject. As I am looking to invest in residential property in the future I would be keen to learn more on this as its not something I have taken into consideration until now. Any advice is welcome and thanks all in advance.

 

James 

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Hi James.

Stamp duty or Land and Building Tansaction Tax as it's known in Scotland is paid when you buy a property, so if your wife already owns property, I can't see why renting it out can incur LBTT. 

If you're buying a second property in Scotland LBTT is 4% upto £145000, so a chunk out any profit from day 1.

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Hi James,

The solicitor is correct here as LBTT is charged on commercial leases, typically payable by the tenant. Link below covers bands etc. 

See the section "Leases of non-residential property - LBTT rates and bands" about two thirds down the page.

https://www.revenue.scot/land-buildings-transaction-tax/guidance/calculating-tax-rates-and-bands

As Craig says above, LBTT on residential property investments is typically 4% so that's something to factor into your calculations. Happy to provide some Scottish specific calculators if that helps.

Cheers,

James

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Thanks James. I looked into it further and I found the link you shared. At least we can charge the tenant for this but still something that needs to be considered. Are you based up in Scotland?

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I am based in Galashiels in the Scottish Borders. This is probably the area I will invest in once I start as I know the area so well. I have been attending a couple of investor meetings in Edinburgh which has been good. I hear Glasgow is a good place to invest just now. Have you got much going on there just now? 

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Yeah that makes sense if you have good stock locally that you know hits your numbers.

Glasgow is especially interesting as you can achieve different goals in different areas. Our own expertise is in properties that provide growth as well as strong yields.

We don't source in your area but always happy to provide any general advice if you'd like to have a chat?

Ta,

James

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