27 Aug 2018
Client Question: My husband and I have seen a property that we would like to purchase. My husband owns our current property which we intend to keep and rent out. I am a first-time buyer and the title to the new property will be in my sole name. Will I benefit from First Time Buyer Relief?
Blackadders Partner Joanne Grimmond Answer: Unfortunately, for the purposes of property tax, spouses are treated as one economic unit. This means that you would be a “deemed owner” of the current main home, even though you are not named on the title to the property. Furthermore, unless your husband sold your current home prior to or on the same day that you purchased your new main residence, you will also be hit with Additional Dwelling Supplement (ADS) which is 3% tax on the FULL purchase price of the new property. This is on top of the Land & Buildings Transaction Tax (LBTT) due. You would not be able to claim the First Time Buyer Relief because ADS applies.
A repayment of the ADS is only available from Revenue Scotland if the buyer in the transaction disposes of their ownership of a dwelling that they had occupied as their main residence. In this instance, title to the new property is being taken in your sole name and your husband is not a buyer. Your husband is not selling the current home. A repayment of the ADS would not be available.
Additional Dwelling Supplement (ADS) applies to transaction Joyce lives with her husband Rupert in a dwelling which is owned by Rupert. Joyce then purchases a dwelling for £200,000 which they will both use as their new main residence. Rupert will retain the current dwelling and use it as a holiday let.
Joyce has never owned a dwelling and meets the definition of a first-time buyer. However, for the purposes of ADS, she is deemed to own the dwelling owned by Rupert, and as Joyce is not replacing her main residence – by selling or disposing of the ownership of her previous main residence – the ADS will apply to the transaction.
As first-time buyer relief is not available where ADS applies to a transaction, Joyce cannot make a claim for the relief on her LBTT return.
A repayment of the ADS is only available if the buyer in the transaction disposes of their ownership of a dwelling that they had occupied as their main residence. In this instance, the person selling the property is not a buyer in the transaction. Therefore a repayment of the ADS would not be available. (Taken from Revenue Scotland's website).
If you are interested in selling your current home, we can arrange a suitable appointment at the property with a member of the Blackadders’ Estate Agency Team to run over the costs and likely selling price for the property. There is no charge for this appointment.