Additional Dwelling Supplement ("ADS") has been a feature of Scottish tax law since 1 April 2016, being an additional amount of Land and Buildings Transaction Tax (LBTT) due on the purchase of additional dwellings, i.e. second homes and buy-to-let properties located in Scotland.
Some teething problems arose with the implementation of ADS, and with effect from 30 June 2017, the Land and Buildings Transaction Tax (Additional Amount – Second Homes Main Residence Relief) (Scotland) Order 2017 ("the 2017 Order") amends the ADS rules on family homes and replacing main residences.
Previously, ADS was payable where spouses/civil partners/cohabitants jointly bought a house but prior to purchasing that new house, the spouses/civil partners/cohabitants sold a house which they lived in together but which was only owned by one of them. Relief is now given under the 2017 Order and no ADS would be payable in such a scenario – as the spouses/civil partners/cohabitants are both considered to be replacing their main residence.
The second change introduced by the 2017 Order is that where spouses/civil partners/cohabitants have jointly bought a house, and after that purchase (but within 18 months of that purchase), they sell their former home which was only owned by one of the couple, then the ADS paid at the time of the purchase of the new home can be reclaimed. Previously, that was not the case as both parties were not considered to be "replacing their main residence".
It is worth bearing in mind that the 2017 Order only affects transactions concluded on or after 20 May 2017, which have settled on or after 30 June 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
