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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 11753
Experience:  30 years as a practising solicitor.
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We are buying a property in Scotland, which will become our

Customer Question

We are buying a property in Scotland, which will become our main residence. Our current main residence is a rental property in Scotland. We do also already own a flat elsewhere in Scotland but it has been rented out for a long time. Will we have to pay the higher rate of LBTT for our imminent purchase? As I understand it if you are selling your main residence to move into another main residence you will not need to pay the higher rate, even if you also own separate buy to let properties. As we are tenants in our current main residence we are not selling it - but we are still moving from one main residence to another while hanging onto our buy-to-let property so it seems unfair if the same rule does not apply to us. Can you help clarify?
Submitted: 1 year ago.
Category: Scots Law
Expert:  JGM replied 1 year ago.

In my opinion ADS does not apply as you are replacing your main residence and the following guidance from the Asvotyish governemet says it doesn't matter if your main residence is bought or rented. See page 27: https://www.revenue.scot/sites/default/files/LBTT%20Additional%20Dwelling%20Supplement%20Legislative%20Guidance%20-%2016%20March%202016_0.pdf#page27.

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Customer: replied 1 year ago.
Hi there,
Following your response I have been in touch with Revenue Scotland and they say that we do have to pay the higher rate of stamp duty. They say only people who are selling their current main residence (not, like us, leaving a property they are renting) can avoid paying the higher rate. I have highlighted the paragraph you sent me, which says a main residence can be a rental property but they say the wording in the legislation highlights that you have to be selling your existing residence to avoid the tax. Do you think we should take this further or is Revenue Scotland correct? Thanks, Jenny
Expert:  JGM replied 1 year ago.

I think you should challenge this. The law is contradictory on this and manifestly unjust if interpreted according to Revenie Scotland as you will appreciate. There is no case law on this yet as far as I am aware and I would take it to a tribunal if I was in your position. It is a nonsense that people who own a house as their home and buy a new home are exempt if they have a rental property but someone who rents a main home but them decides to buy one is landed with the ADS because they too have a rental property. That was not what the legislation intended.

Customer: replied 1 year ago.
Thank you very much. What do you think our next step should be? This kind of thing is very new to us!
Expert:  JGM replied 1 year ago.

LBTT is a self assessment tax. For that reason I would have your solicitor put the return through as "ADS not applicable" and leave Revenue Scotland to challenge it if they see fit to do so. If they make a formal assessment that it does apply then you can appeal.