This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Scottish ADS.. ability to nominate second home?

Colin61
Posts:32
Joined:Sun Dec 31, 2017 3:53 pm
Scottish ADS.. ability to nominate second home?

Postby Colin61 » Tue Mar 08, 2022 6:46 pm

I personally own a property in Scotland which both my partner and I occupy; my partner does not own any property in her name. The property is valued at around £150000.

We intend to purchase a house jointly, the new property will be around £350,000. I will retain the current property to rent out.

Can we nominate the current property as the second property and pay Additional Dwelling Supplement on that?

Colin61
Posts:32
Joined:Sun Dec 31, 2017 3:53 pm

Re: Scottish ADS.. ability to nominate second home?

Postby Colin61 » Wed Mar 09, 2022 8:50 am

... been doing some more research on this.
Am i right in thinking that this situation is covered by the flowchart here ( https://www.lawscot.org.uk/members/journal/issues/vol-66-issue-09/property-ads-the-hidden-traps/) and follows the "left column" of the flow-chart ?

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: Scottish ADS.. ability to nominate second home?

Postby bd6759 » Thu Mar 10, 2022 9:49 am

It is coveted. All your answers are “no” which tells you that the transaction is liable to the ADS.

Simply put, when you buy the new property you will own two properties therefore that transaction is liable to ADS.

Colin61
Posts:32
Joined:Sun Dec 31, 2017 3:53 pm

Re: Scottish ADS.. ability to nominate second home?

Postby Colin61 » Thu Mar 10, 2022 10:03 am

It is coveted. All your answers are “no” which tells you that the transaction is liable to the ADS.

Simply put, when you buy the new property you will own two properties therefore that transaction is liable to ADS.
Sorry but I do not understand your response..... are you saying that my situation answers "no" at each step of the flow chart?

I recognise that ADS will be due; however, I am trying to establish which property will incur the ADS

Thank you for helping on this; it's useful to have fresh eyes.

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: Scottish ADS.. ability to nominate second home?

Postby bd6759 » Fri Mar 11, 2022 9:42 pm

Yes. You are answering “no” to all the questions, meaning you are liable to the additional rate.

It is a transaction tax payable in connection with the transaction you are about to complete. It is that transaction which makes you liable.

If you read the article it tells you that it does not matter that you intend to live in the house.

Colin61
Posts:32
Joined:Sun Dec 31, 2017 3:53 pm

Re: Scottish ADS.. ability to nominate second home?

Postby Colin61 » Sat Mar 12, 2022 10:13 am

I personally own a property in Scotland which both my partner and I occupy; my partner does not own any property in her name. The property is valued at around £150000.

We intend to purchase a house jointly, the new property will be around £350,000. I will retain the current property to rent out.

Can we nominate the current property as the second property and pay Additional Dwelling Supplement on that?
For our situation, I believe the answers for the (https://www.lawscot.org.uk/members/journal/issues/vol-66-issue-09/property-ads-the-hidden-traps/) flow-chart are N,N,N,Y,Y which leads to an outcome of "ADS applies to the property which is NOT the Main residence". Hence we would be paying ADS on the £150,000 property...which is preferable to paying it on the £350,000 property.

I would appreciate guidance on this interpretation.

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: Scottish ADS.. ability to nominate second home?

Postby bd6759 » Sat Mar 12, 2022 5:16 pm

Sorry. I meant no, no, yes, no.

You are not replacing your old residence. Replacing means you have to sell it. (That is what the law says).

LBTT is paid on the value of the transaction. You buy a house for £350k, you pay LBTT on that value.

JBern
Posts:2
Joined:Sat Mar 12, 2022 6:06 pm

Re: Scottish ADS.. ability to nominate second home?

Postby JBern » Sat Mar 12, 2022 6:26 pm

My understanding is you have to pay LBTT on the new property no matter what.

But that as you are moving into your new property (replacing your main residence), you will have two properties. So you are asking can you choose pay ADS on the original property (as this is now your second property) and the new property is your main residence.

I'd think the answer depends on the last step of the flowchart you linked to and how main residence is legally defined?

This site may help: https://revenue.scot/taxes/land-buildings-transaction-tax/legislation-guidance/lbtt10001-lbtt-additional-dwelling-supplement/lbtt10010-how-ads-works/lbtt10020-how-determine-if-only-or-main-residence

Colin61
Posts:32
Joined:Sun Dec 31, 2017 3:53 pm

Re: Scottish ADS.. ability to nominate second home?

Postby Colin61 » Sun Mar 13, 2022 9:35 am

My understanding is you have to pay LBTT on the new property no matter what.

But that as you are moving into your new property (replacing your main residence), you will have two properties. So you are asking can you choose pay ADS on the original property (as this is now your second property) and the new property is your main residence.

I'd think the answer depends on the last step of the flowchart you linked to and how main residence is legally defined?

This site may help: https://revenue.scot/taxes/land-buildings-transaction-tax/legislation-guidance/lbtt10001-lbtt-additional-dwelling-supplement/lbtt10010-how-ads-works/lbtt10020-how-determine-if-only-or-main-residence
Thank you, we accept that LBBT is payable on the new property. I'll have a read through that link to see if we can nominate our current/cheaper home for the ADS.

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: Scottish ADS.. ability to nominate second home?

Postby bd6759 » Sun Mar 13, 2022 11:55 am

ADS is not a separate charge. It is part and parcel of the LBTT that you pay on your new property.

You cannot choose to pay ADS separately based on the value of some other property.

You are not selling your old residence therefore you are not replacing it.


Return to “Stamp Duty, Stamp Duty Land Tax, SDLT”

cron