Homes under the hammer
A second home can create a supplemental income for your family if you let it while you’re not in occupation. The property may also produce a handy profit on sale, if you’ve held it for long enough to ride out the property slump. Obviously you, and any joint owners, must declare any income and gains from the property on your relevant personal tax returns.
HMRC has recently launched a ‘property sales disclosure campaign’ to chase up undeclared gains made on the sale of second homes and buy-to-let properties. This covers gains made on properties located in the UK and abroad.
The taxman can access the Land Registry database to check up on all property sales in the UK, and has a database of all the properties for which stamp duty land tax was paid on the purchase. There are also tax information exchange agreements in place between the UK and many other countries, which allow data concerning property sales to be passed to the UK tax authority.
Anyone who has not declared their rental income or gains on sale can take advantage of reduced penalties if they register to make a disclosure, which must be done by 9 August 2013, and pay all the tax due by 6 September 2013. The disclosure must include any rental income generated by the property, not just the gain made on disposal.
We can help you check if you have already made all the relevant disclosures and claimed any reliefs due on the gain. If there are gaps in disclosure, a full and unprompted declaration is usually the best approach.
