Land and Buildings Transaction Tax (LBTT).

calmity72

Hi Folks,

I bought a flat in 2006 but met my partner a few years later and moved in and have rented my property since then. I still own the flat and have a buy to let mortgage in place. Everything above board with landlord registration, mortgage company and tax man.

My partner has the mortgage for the house that we live in now and has since I moved in.

However, we want to sell the home we live in and buy a bigger place and I can't seem to find the answer to my question.

If we combine incomes and we buy a new bigger place, would we need to pay the additional property tax? Not trying to avoid paying what's owed but just need to understand if we need to save more to pay for these additional costs? Its effectively 4X what we would need to pay and would mean that it is unaffordable?

Anyone with any factual information, which might be helpful?

Thanks in advance

Cals

calmity72

anyone with any help or references?

Thanks in advance?

Cals

00ec25

are really unable to follow the guidance? There are examples covering your exact circumstances since it is very obviously going to be common:
https://www.revenue.scot/land-buildings-transaction-tax/frequently-asked-questions/additional-dwelling-supplement

https://www.revenue.scot/land-buildings-transaction-tax

AdrianC

calmity72 wrote: »

I bought a flat in 2006 but met my partner a few years later and moved in and have rented my property since then. I still own the flat and have a buy to let mortgage in place. Everything above board with landlord registration, mortgage company and tax man.

My partner has the mortgage for the house that we live in now and has since I moved in.

However, we want to sell the home we live in and buy a bigger place and I can't seem to find the answer to my question.

If we combine incomes and we buy a new bigger place, would we need to pay the additional property tax?

You are not married? So you're treated as two separate individuals. If either of you are liable to the +3%, then it applies to the entire purchase price.



You currently own one property - flat A.
You will own two properties - flat A and house C - at the end of this.

So... +3% SDLT is payable.


If you're thinking of the primary residence exception, then you have not lived in flat A for more than three years, and do not own house B, your current residence. So it doesn't apply.



Your partner will only own one property at the end of the process. There is no +3% liability because of them.

Its effectively 4X what we would need to pay and would mean that it is unaffordable?

"Effectively 4x"? Hardly... It's an additional 3% of the purchase price. No more than that.


You could avoid paying it by completing on the sale of your rental flat before completing on the purchase of this house. Your partner could avoid it by buying the house on their own.

SDLT_Geek

AdrianC wrote: »

So... +3% SDLT is payable.

This is in Scotland where the Additional Dwellings Supplement to LBTT has just gone up from 3% to 4%.

AdrianC

SDLT_Geek wrote: »

This is in Scotland where the Additional Dwellings Supplement to LBTT has just gone up from 3% to 4%.

OK, my bad. And I s'pose that an effective rate of 1% of "normal" LBTT would apply to a property around the high-£200k mark, so that's where the "4x" is coming from.

But that's focussing on "4x" just one very small part of the total cost of buying a property. It's ~£9k on ~£300k of total expenditure.

Pixie5740

Actually the OP won't have to pay the Additional Dwelling Supplement. In Scotland, for the purposes of LBTT, co-habitees are treated the same as married couples and civil partners.

Married couples, those in a civil partnership and cohabitants (those living together as though married, including same-sex cohabitants), along with their dependent children (children under 16, including adopted children), are treated as one economic unit for the purposes of the application of the ADS.

Source: Revenue Scotland

pinklady21

I don't think you would have to pay the ADS either.
Pixie is quite correct, on Scotland, co-habiting couples are treated as one unit for LBTT.

You are swapping your current owned main residence for another owned main residence. Therefore, assuming you sell your current main residence before or on the same day as you purchase your next main residence you would be liable only for "normal" LBTT and not the ADS of 4% on top.

If you had not sold your current main residence before buying another main residence, then you would pay the ADS; but if you then sold your previous main residence within 18 months (not three years as in E and W), you could reclaim the ADS part of the LBTT.

I believe that if the timelag between buying your new house and selling your old one is less than 28 days, your solicitor would simply hold onto the ADS, and would be able to repay it to you straight away once your old house sold. (I was in a similar situation, and that is the advice my solicitor gave me).

However, best to run all these questions by your solicitor, as usually they are well versed in issues like this. Best of luck.

abdn789

Hi,

I was wondering if anyone could help me on the below.

I own a flat which I previously lived in and I have now bought a house for me and my partner. Her name is not on the new or old mortgage so I have been charged approx £12,000 LBTT for my second home. I have been told I can claim the full amount back if I sell my first property within 18 months?

I stand to lose about £35,000 on what I paid for my flat if i sell it due to the market so I am reluctant to put it up for sale, I was wondering if it is possible for my partner to 'buy it' as her name is not on the deeds or mortgage. She gets her mail delivered to our new address and is on the electoral role with that address so I am not sure if this is legal or how it would work? Or how it works if a company was to buy it for example for their employees to live in whilst working here?

Any suggestions appreciated, thanks

[Deleted User]

abdn789 wrote: »

Hi,

I was wondering if anyone could help me on the below.

I own a flat which I previously lived in and I have now bought a house for me and my partner. Her name is not on the new or old mortgage so I have been charged approx £12,000 LBTT for my second home. I have been told I can claim the full amount back if I sell my first property within 18 months?

I stand to lose about £35,000 on what I paid for my flat if i sell it due to the market so I am reluctant to put it up for sale, I was wondering if it is possible for my partner to 'buy it' as her name is not on the deeds or mortgage. She gets her mail delivered to our new address and is on the electoral role with that address so I am not sure if this is legal or how it would work? Or how it works if a company was to buy it for example for their employees to live in whilst working here?

Any suggestions appreciated, thanks

As above, you're a co-habiting couple so as far as Revenue Scotland are concerned the current home is treated as being owned by both of you and your partner will pay the extra 4% if she buys your old property.