diff --git a/src/ca65/symentry.c b/src/ca65/symentry.c
index 1048bfbc2..c57fcff2a 100644
--- a/src/ca65/symentry.c
+++ b/src/ca65/symentry.c
@@ -211,6 +211,8 @@ static void SymReplaceExprRefs (SymEntry* S)
 void SymDef (SymEntry* S, ExprNode* Expr, unsigned char AddrSize, unsigned Flags)
 /* Define a new symbol */
 {
+    int Redef = 0;      /* Flag for symbol redefinition */
+
     if (S->Flags & SF_IMPORT) {
         /* Defined symbol is marked as imported external symbol */
         Error ("Symbol '%m%p' is already an import", GetSymName (S));
@@ -238,6 +240,7 @@ void SymDef (SymEntry* S, ExprNode* Expr, unsigned char AddrSize, unsigned Flags
             */
             FreeExpr (S->Expr);
             S->Expr = 0;
+            Redef = 1;
         }
     }
 
@@ -291,8 +294,10 @@ void SymDef (SymEntry* S, ExprNode* Expr, unsigned char AddrSize, unsigned Flags
         }
     }
 
-    /* If this is not a local symbol, remember it as the last global one */
-    if ((S->Flags & SF_LOCAL) == 0) {
+    /* If this is not a local symbol and not a redefinition for a variable
+    ** symbol, remember it as the last global one.
+    */
+    if ((S->Flags & SF_LOCAL) == 0 && !Redef) {
         SymLast = S;
     }
 }
diff --git a/test/asm/err/bug505.s b/test/asm/err/bug505.s
new file mode 100644
index 000000000..8cb0e2f18
--- /dev/null
+++ b/test/asm/err/bug505.s
@@ -0,0 +1,28 @@
+; Test for #505 taken from the issue
+; Redefining a variable symbol "reopens" the old name space for cheap locals
+; Behavior should be: First definition of a variable symbol opens a new
+; scope for cheap locals, redefinitions of the same symbols do not.
+
+;this starts a new scope for cheap local lables
+SomeSymbol .set 4
+
+        jmp @CheapLocal1
+
+@CheapLocal0:
+
+        .byte $8b
+
+CheapLocalScopeBreaker0:
+
+CheapLocalScopeBreaker1:
+
+CheapLocalScopeBreaker2:
+
+CheapLocalScopeBreaker3:
+
+;this continues the same cheap scope as before, regardless of the many global labels in between
+SomeSymbol .set 5
+
+@CheapLocal1:
+
+        lda @CheapLocal0