Individuals do not pay LBTT on dwellings that they inherit, and this treatment will not change with the introduction of the ADS. However, inherited dwellings will be relevant when determining if a buyer is purchasing an additional dwelling or not.
Where a buyer is entitled/has right to the ownership of a dwelling but has not taken title to that dwelling, that buyer is deemed to be the owner of the dwelling for the purposes of the LBTT(A)(S)A 2016 ("deemed ownership").
An inherited dwelling is to be counted as being owned by a beneficiary from the earlier of:
(a) the date that the period of administration of the estate ends – generally, this is the date the residue of the estate has been ascertained, rather than when the executor has carried out all work in relation to the estate; and
(b) the date that the dwelling is transferred to the beneficiary – that is the date the executor grants a disposition or a docket transfer in favour of the beneficiary (whether or not registration of title is at a later date).
If an individual owns a dwelling in their capacity as a personal representative (i.e. an executor) then they are deemed for the purposes of the LBTT(A)(S)A 2016 not to be the owner of that dwelling.
Example 62: Inherited dwelling sold and second dwelling purchased, no replacement of main residence