Scotland - 3% Additional Dwelling Supplement.

AnotherJoe

Pixie5740 wrote: »

There's no need to hope that AnotherJoe is correct because AnotherJoe is correct. It's called the "Additional Dwelling Supplement" because you pay it when you purchase an additional dwelling. You are not purchasing an additional dwelling, you are replacing your current main residence with a new main residence. Your mum's house, or rather the house owned by you and your sibling, is irrelevant to the transaction.

In simple terms you currently own 2 properties and at the end of the transaction you will still only own 2 properties.

I cannot see how your ex getting a valuation carried out on your current home would make any difference to your ADS liability, or rather lack of it. Your mum is lucky that your ex isn't going for a share of the house she put into your and your sibling's names. She did but OP won that case

Your mum's little ruse to make the tax payer pick up the whole tab for any care she might need in the future may not work because if the council assess her as deliberately depriving herself of assets they will still take the value of the house into consideration. She may well land you and your sibling with a Capital Gain Tax bill in the future too. :T

Yes, this scheme already caused hassle when ex realised that OP owned another house and wanted some of that as well. And although that worked, if OP got into financial issues, creditors would have no compunction about going after it either.

And as said, when mum dies, instead of house being passed on as is, there may be CGT to pay if they sell the house. And any IHT fees wont be mitigated as its a gift with reservation.

My mum recently died, before that we'd starting selling her flat as it was needed to fund her care home fees. However the fact she would have had money from that sale to finance that meant she could go into a care home of her/my choosing rather than whatever dump the council decreed she should go into, their decision would be based simply on whatever was cheapest.

When I read the Scottish Government pages on the ADS it's as clear as mud. It starts off pretty straightforward and the example given is that a housing developer can sell their main residence and buy a new main residence without liability. But then it goes on to talk about inherited houses which automatically are considered to be your main residence even if you don't live there. Anyway thanks for your help

Well, even if that was true, which i doubt, this isn't an inherited house.

And looking through the examples, its quite clear if you are replacing your main residence there is no additional tax. There's even an example of someone with 5 BTLs selling their home to buy another and no additional tax. (my underlining for emphasis)

Q: I own five flats which I rent out. I also own a house which I live in but I am thinking about selling this and moving into a bigger house. I have heard that if I own more than one property, I will have to pay additional tax on any other properties that I buy. Is this true?
A: Whether you will have to pay the Additional Dwelling Supplement will depend on which type of property you buy.
If you buy a new main residence and sell the old one at the same time or before you buy the new one, then the Additional Dwelling Supplement will not apply as, although you will own more than one property, you are selling an old main residence and replacing it with a new one.
However, if you buy another flat to rent out, because you will not be selling an old main residence, the supplement will apply.

I think your trainee solicitor should do some more training and your financial adviser should go on the same course, perhaps they will get a quantity discount

tpbstu

Thanks Another Joe. That's a relief.

You called it right regarding my ex. it was the life rent that saved the house in the end.

Mizzikate

We are moving from the country back to the city to be near our daughter. Solicitor did not inform us of ADS and we feel there has been a lack of publicity on the part of the ascot Government. Our problem is that our flat in the city is costing an awful lot more than our house in the country, which is not selling. If we move into the flat ( it is a new build) when it is ready, and our house is still not sold, will the flat be our main residence, thus avoiding the ADS? We have really pushed out the boat to buy thus flat and the ADS has just floored us. I am aware it can be claimed back when we sell the house, but it's finding it in the first place. We have no mortgage

Pixie5740

Mizzikate wrote: »

We are moving from the country back to the city to be near our daughter. Solicitor did not inform us of ADS and we feel there has been a lack of publicity on the part of the ascot Government. Our problem is that our flat in the city is costing an awful lot more than our house in the country, which is not selling. If we move into the flat ( it is a new build) when it is ready, and our house is still not sold, will the flat be our main residence, thus avoiding the ADS? We have really pushed out the boat to buy thus flat and the ADS has just floored us. I am aware it can be claimed back when we sell the house, but it's finding it in the first place. We have no mortgage

You are purchasing an Additional Dwelling so I have no idea why you think the Additional Dwelling Supplement wouldn't apply to you. The flat will become your main residence but it is not a replacement of your main residence because you haven't sold that yet.

You will have 18 months from settlement to sell your current main home in order to claim back the Additional Dwelling Supplement. If your home in the country is not selling it is probably due to price because anything will sell if priced correctly.

davidmcn

Mizzikate wrote: »

we feel there has been a lack of publicity on the part of the ascot Government.

It's not exactly a secret. What sort of publicity were you expecting?