Additional Dwelling Supplement - Scotland - complicated situation house fire and demolition

user1977

ProDave said:

Does it work like in England, if you temporariliy own 2 "main residences" and then sell one within a certain period, you get the additional land tax refunded?  If it does, then as soon as the land registry issue is resolved and you no longer own the now empty plot, you will get it back.

The difficulty is that the property they're selling isn't their main residence, or even qualifies as a dwellinghouse. So they currently only own one dwelling (the BTL) and a buying an additional dwelling, so the ADS applies.

From a quick look I can't see anything in the legislation which looks like an exemption for this sort of situation. I don't know whether there is scope to make a case for a specific exemption for the OP.

theoretica

Why didn't ownership transfer when the insurance claim was settled?  It seems that the bank are, for their convenience, not taking ownership of the property but this is inconveniencing you.  And is it necessary for the land registry to be changed?  As when someone dies, the house is owned by their estate and then sold, but I don't think that takes two land registry changes.

user1977

theoretica said:

Why didn't ownership transfer when the insurance claim was settled?  It seems that the bank are, for their convenience, not taking ownership of the property but this is inconveniencing you.  And is it necessary for the land registry to be changed?  As when someone dies, the house is owned by their estate and then sold, but I don't think that takes two land registry changes.

I presume the OP means the bank have repossessed - which doesn't involve anything being registered at the Land Register, so the registered ownership will only change from the OP whenever the bank's buyer registers their title.

_Penny_Dreadful

ProDave said:

Does it work like in England, if you temporariliy own 2 "main residences" and then sell one within a certain period, you get the additional land tax refunded?  If it does, then as soon as the land registry issue is resolved and you no longer own the now empty plot, you will get it back.

When replacing your main residence in Scotland you have 18 months from buying your new main residence to sell your old main residence. 

_Penny_Dreadful

npowerckd said:

Hopefully someone can shed some light as Revenue Scotland thus far have not been able to answer
the scenario is complicated...
property 1 - purchased 2006 - buy to let mortgage and currently rented
property 2 - purchased 2012 - my residential home

Whilst the above may seem easy, property 2 has been destroyed by fire and has been demolished and the insurance claim has been settled - however until the bank sell the land we have "legal" ownership of the land (land registry), we have no rights to it - we cant keep it, we cant build on it - its going to be sold by the bank and they will changed the ownership once this is done

Property 3 - what we are having to buy as our new residential home

Now when i spoke to inland revenue previously they had said as we retain ownership then we liable for ADS (and claim it back on sale), however that was with a dwelling (albeit inhabitable) on the site, now there is no property and no rights to build and its just effectively waste ground what are the chances we are going to have to pay ADS

Any help would be appreciated.

This is what Revenue Scotland counts as a dwelling 

A building or part of a building counts as a dwelling if:

• it is used or is suitable for use as a single dwelling or
• it is in the process of construction or adaption for such use

Considered to be a dwelling:

• where a large house has been split into three separate flats this will be defined as three dwellings
• land enjoyed as part of a dwelling, such as a garden or grounds, will be taken as part of the dwelling
• a dwelling on a site to be refurbished or demolished would count as a dwelling
• holiday homes and lets, including those which cannot be used all year round, are considered as dwellings

Not considered to be a dwelling: 

• a cleared site with no buildings would not count as a dwelling even if it had planning permission for the construction of residential property
• caravans, mobile homes or houseboats will not normally be considered as dwellings unless they become sufficiently fixed to the land that they become part of the land. In such cases, these may be a dwelling if they meet the normal definition

It sound like property 2 is not considered to be a dwelling by Revenue Scotland. My interpretation would be that as long as there are not more than 18 months between the demise of property 2 and the purchase of property 3 the ADS should not be due on the purchase. 

https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-legislation-key-terms

sheramber

It sound like property 2 is not considered to be a dwelling by Revenue Scotland

If property 2 is not considered a dwelling then the OP only has a BTL- No main residence. 

In that case  he is not replacing his main residence but is  buying a second property, hence  Revenue Scotland  considering  ADS is payable.

housebuyer143

sheramber said:

It sound like property 2 is not considered to be a dwelling by Revenue Scotland

If property 2 is not considered a dwelling then the OP only has a BTL- No main residence. 

In that case  he is not replacing his main residence but is  buying a second property, hence  Revenue Scotland  considering  ADS is payable.

But really that's so unfair. He is replacing main residence it just so happens that old one burned down... I hope sense is seen here.

sheramber

Could the following not apply to the OP, assuming  he is within 18 months of  disposal.

https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-legislation-key-terms#LBTT10020

Replacing a main residence - the two stage test

To determine if a purchase of a dwelling is a replacement for a main residence is a two stage test.

A buyer is replacing their only or main residence if:

1. The buyer disposes of their only or main residence during the 18 months before the effective date of the transaction for the new dwelling, and
2. The buyer intends to occupy the new dwelling as their only or main residence on the effective date of the transaction.

user1977

sheramber said:

Could the following not apply to the OP, assuming  he is within 18 months of  disposal.

https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-legislation-key-terms#LBTT10020

Replacing a main residence - the two stage test

To determine if a purchase of a dwelling is a replacement for a main residence is a two stage test.

A buyer is replacing their only or main residence if:

1. The buyer disposes of their only or main residence during the 18 months before the effective date of the transaction for the new dwelling, and
2. The buyer intends to occupy the new dwelling as their only or main residence on the effective date of the transaction.

The difficulty is that "disposal" is selling a dwelling, and property 2 is no longer a dwelling.

theoretica

user1977 said:

sheramber said:

Could the following not apply to the OP, assuming  he is within 18 months of  disposal.

https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-legislation-key-terms#LBTT10020

Replacing a main residence - the two stage test

To determine if a purchase of a dwelling is a replacement for a main residence is a two stage test.

A buyer is replacing their only or main residence if:

1. The buyer disposes of their only or main residence during the 18 months before the effective date of the transaction for the new dwelling, and
2. The buyer intends to occupy the new dwelling as their only or main residence on the effective date of the transaction.

The difficulty is that "disposal" is selling a dwelling, and property 2 is no longer a dwelling.

 I think it must be very worth arguing that they formerly had a property that was their main residence, they no longer do and therefore it has been disposed of.  However convoluted the steps from having it to not having it were.  There are many other methods of disposal than sale (and waste disposal can include burning).