What are the tax implications on an annexe?
Believe it or not you could be liable for a separate council tax bill for an annexe. This is classed as a separate dwelling and whether it only has access via the main house if it has it's own kitchen and bathroom this would be classed as a separate dwelling.
You may be able to apply for a 'Class T' exemption to the second amount of tax if it is possible to prove that the annexe is :
- for sole family use
- for someone who is substantially mentally or physically disabled
- for a relative over the age of 65
You may also need separate planning for the annexe. Also since April 2016 buying a property with an annexe could be classed as buying a second home and therefore be liable to the extra 3% stamp duty.
The government's idea of helping a dependent relative seems to have been ignored in more stealth taxes.
Any property advice Cooper Adams are here to help.