The Additional Dwelling Supplement (Scotland)

acm21

I have a question around ADS (currently 6% in Scotland).

I have just purchased Property1 (£200K) (my main residence), I am looking to purchase a buy-to-let flat, Property2 (£100K). I know I'll have to pay 6% ADS on Property2 plus income tax.

I'd like confirmation on the following situation:

Property2 will be purchased with a buy-to-let mortgage and the ADS will be paid. However, I intend to sell Property1 within 2 years of buying Property2. Making Property2 my only property. In this specific situation will I be able to claim an ADS repayment as there seems to be a 36 month time frame you can do this?

Also, as a side note Property1 was purchased as my main residence but I have had to get a permission to let mortgage (due to family health reasons I have had to move back to the family home), so when sold this will also be a buy-to-let. Does this change how ADS works and if I can still make a claim for a repayment? 

Additional question on Capital Gains Tax. When selling Property1 will CGT be applicable if the property was lived in by me at some point but NOT at the time of the sale? 

Any help into this situation is much appreciated. 

Bookworm105

CGT - you may have CGT to pay depending on your taxable gain numbers...
Selling price - purchase cost - costs of buying/selling = gross gain
Private residence relief: period (in months) lived in + final 9 months of ownership(if not lived in) divided by total ownership period (in months) = PRR % 
Gross gain - (gross gain x PRR %) = Net gain  
Net gain - CGT personal allowance = Taxable gain 


ADS 
The criteria are fairly clear
- sell property 1 within 36 months of buying property 2
and
- Property 1 must have been your main/only home during at least part of those 36 months (so it might have been BTL during some of that 36, but not all of that 36)
and
-  you must have lived in property 2 as your (new) main home 

What is the relationship between properties 1&2 and "the family home"? The latter appears to be where you have actually been living in as "main home" - for how long? 
Is that your family,  ie your wife and children? If yes, then you will need to go some to convince anyone that either property 1 or 2 was ever your main home in the first place if the family actually lives elsewhere (unless you are divorced/separated?). 

sheramber

Bookworm105 said:

ADS 
The criteria are fairly clear
- sell property 1 within 36 months of buying property 2
and
- Property 1 must have been your main/only home during at least part of those 36 months (so it might have been BTL during some of that 36, but not all of that 36)
and
-  you must have lived in property 2 as your (new) main 

Check bullet point b

You can claim a repayment if:

• a) you sell your previous property within 36 months of the date of buying your new one;

and

• b) the property you sold was your only or main residence at any time in the 36 months before you bought the property that you paid the ADS on;

and

• c) you have lived in the property you paid the ADS on as your only or main residence.

https://revenue.scot/taxes/land-buildings-transaction-tax/additional-dwelling-supplement-ads

sheramber

Bookworm105 said:

sheramber said:

Bookworm105 said:

ADS 
The criteria are fairly clear
- sell property 1 within 36 months of buying property 2
and
- Property 1 must have been your main/only home during at least part of those 36 months (so it might have been BTL during some of that 36, but not all of that 36)
and
-  you must have lived in property 2 as your (new) main 

Check bullet point b

You can claim a repayment if:

• a) you sell your previous property within 36 months of the date of buying your new one;

and

• b) the property you sold was your only or main residence at any time in the 36 months before you bought the property that you paid the ADS on;

and

• c) you have lived in the property you paid the ADS on as your only or main residence.

https://revenue.scot/taxes/land-buildings-transaction-tax/additional-dwelling-supplement-ads

perhaps the way I wrote it requires a greater level of reading comprehension?

"of those 36 months" means the same as the official wording 

thpse 36 months reads to me as the  36 months referred to in the point above  which are  the 36 months after the date of the  purchase to the second property.

But  the  official wording is

the 36 months before the purchase of the second property.