The Scottish government has proposed amendments to the Additional Dwelling Supplement (ADS) legislation found within Schedule 2A of the Land and Buildings Transaction (Scotland) Act 2012. These proposed amendments are aiming to bring change to the existing framework governing the purchase of additional properties.
This summary article will provide an overview of the proposed amendments, highlighting their key elements and implications for stakeholders in the real estate industry.
The Additional Dwelling Supplement is a tax levied in Scotland on the purchase of additional residential properties, such as second homes and buy-to-let investments. It was introduced in 2016 with the intention of ensuring a level playing field for first-time buyers and discouraging the purchase of second homes, which can contribute to rising house prices and restrict housing availability.
The proposed amendments include changes to:
The proposed amendments seek to extend relevant timelines from 18 to 36 months in three specific areas:
The amendments aim to disregard properties inherited after the conclusion of purchase agreements for a new main residence for the purposes of the ADS. Additionally, there will be a clarifying amendment regarding the point of ownership of an inherited property.
In the context of deemed ownership provisions, the proposed amendments suggest disregarding property shares for ADS purposes if the individual taxpayer's share value is less than £40,000.
Relief from the ADS will be provided for the purchase of a main residence when a court order requires the retention of an interest in a previous main residence (PMR).
There are three amendments proposed under this section, covering the main residence joint purchase and the economic unit provisions. The amendments detailed propose:
Relief from the Land and Buildings Transaction Tax (LBTT) and ADS will be provided for local authorities when the purchase is funded under section 2 of the Housing (Scotland) Act 1988.
The proposed amendments to the Additional Dwelling Supplement legislation in Scotland entail various changes that aim to refine the existing framework. The extension of timelines, considerations for inherited properties, provisions for small shares, relief for divorce or separation cases, joint buyer arrangements, and local authority relief are all key elements of the proposed amendments. Stakeholders in the real estate industry should familiarise themselves with these proposals to understand their implications and adapt their practices accordingly. For further details and draft clauses, please refer to Section 3 and Annex A of the proposal document.
If you are looking to buy property, contact one of our solicitors today for comprehensive advice and support. Contact us on 01224 087284 or complete our online enquiry form and a member of the team will be in touch.