The Land and Buildings Transaction Tax (Additional Amount - Second Homes Main Residence Relief) (Scotland) Order 2017 ( the SSI Order 2017) amends the ADS rules around family units and replacing main residences in Schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013 by introducing two further paragraphs: 8A and 9A.
Para 9A – provides relief from the ADS in certain circumstances when two buyers jointly buy a new dwelling and previously lived together as a married couple, civil partners or cohabitants in a dwelling owned by either one of them solely.
Para 8A - is in connection with repayment of the ADS paid on transactions where the joint buyers are spouses, civil partners or cohabitants where only one buyer owned their previous main residence and they sold that previous main residence.
Prior to the SSI order 2017 any transactions:
where spouses or cohabitants jointly bought a dwelling, and
prior to the purchase they sold a dwelling that they both lived in but was owned by only one of them, and
- at the effective date of the new joint purchase either buyer owned or was deemed to own a further dwelling,
then the ADS would apply to the purchase because both buyers were not replacing their main residence (as the previous main residence was owned by only one of them). However, the SSI Order 2017 introduces relief (paragraph 9A of schedule 2A to the LBTT(S) Act 2013) that means in these circumstances the purchase made by the joint buyers would not attract the ADS because both buyers would be treated as replacing their main residence. For the relief to apply, the property sold must have been the main residence of both the joint buyers, and these joint buyers must be spouses, civil partners or cohabitants.
Furthermore, prior to the SSI Order 2017:
where spouses, civil partners or cohabitants jointly bought a dwelling, and
after that purchase, but within 18 months of it, they sold their previous main residence, and
- that previous main residence was owned by one of them only,
then the ADS would be payable on the purchase and the buyers would not be able to reclaim the ADS paid because they were not both replacing their main residence.
However under the new paragraph 8A the ADS will still be due and payable (because at the end of the day on which the purchase is made one of the buyers owns more than one dwelling) but when the previous main residence is sold (within 18 months of the purchase), the buyers will be able to reclaim the ADS paid. Again, the repayment will only be due if the dwelling sold was the main residence of both joint buyers and if the joint buyers are spouses, civil partners or cohabitants.
The changes to the legislation only apply to transactions where the contract is entered into on or after 20 May 2017 and where the transaction completes on or after 30 June 2017.
Example 48A - One spouse owns main residence, joint purchase of new main residence
Example 73A – Repayment of ADS already paid on sale of previous main residence solely owned by only one buyer
Example 47A – One spouse owns main residence, joint purchase of new main residence but the transaction does not meet the conditions of the amended legislation