LBTT3012 - Part exchange relief

LBTT3012 - Part exchange relief

This relief is provided by the relevant provisions of schedule 4 to the LBTT(S)A 2013.

Description of relief

Where a house building company buys a home from a person who is buying a new home from the house building company (i.e. a ‘part-exchange deal’), the purchase by the house building company is relieved from LBTT if certain conditions are met.

LBTT(S)A 2013 schedule 4 paragraph 2

This relief does not apply to persons who exchange homes.

Relief conditions

The person(s) must:

• buy a new home from the house building company;
• have lived in the old home as their main or only residence at some time during the two years before the house building company bought it from them;
• intend to live in the new home as their main or only residence; and
• sell the existing home to the house building company in total or partial consideration for the new home.

LBTT(S)A 2013 schedule 4 paragraph 4

In addition, the garden or grounds sold with the home to the house building company must not exceed the ‘permitted area’ which is 0.5 hectares (including the site of the home) or, if larger, it must be a piece of ground in keeping with the size and character of the home. In the latter case, the permitted area is to be taken as the part of the land that would be most suitable for occupation and enjoyment of the home as its garden or grounds if the rest of the land were separately occupied.

Partial relief

If the conditions listed above are met, but the condition relating to the permitted area of the garden or grounds is not, partial relief may be claimed. The chargeable consideration for the acquisition of the person’s home by the house building company is calculated by deducting the market value of the permitted area from the market value of the home.

LBTT(S)A 2013 schedule 4 paragraph 3

Claiming the relief

To claim this relief see the guidance on 'How to make a LBTT return and pay tax' which is available separately on our website. Please note, this falls under the ‘Relief for certain acquisitions of residential property’ option on the ‘Type of Relief’ drop down on the return.