I live in Scotland and would like to buy my first home, but I’m confused about the Land and Buildings tax, which Scots pay instead of stamp duty in England and Wales, and how it applies to second homes.
I am married, but my husband and I live entirely separately. We are both doctors but while he has finished his training and works as a consultant 75 miles away, I have two years of training left which I must complete in Glasgow. So I live and work in Glasgow in a rented fl at and he lives in Dumfries in a home he has owned since before our marriage. His house is not and never has been my main residence – I spend an average two to three days there a month – the property I wish to buy will be my full-time home.
I’ve been told that despite our separate main residences and the fact the property will be bought using my own funds and be in my name alone, my husband and I are considered a single ‘economic unit’ so I will be liable for the extra 3% second home tax.
Is that definitely the case? If so, are any exemptions ever considered based on individual circumstances?
The Additional Dwelling Supplement (ADS) applies to transactions in Scotland and is similar in scope to the additional stamp duty rate in England, Wales and Northern Ireland. 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 determining how many properties a buyer owns.
Any dwelling that is owned by a buyer’s spouse, civil partner, cohabitant or dependent child is treated as being owned by the buyer themselves when calculating ADS.
Unfortunately, this means your husband’s property will be counted as yours, and you will have to pay ADS if you purchase a home in Glasgow. The only exception to this would be if you and your husband were permanently separated.
The only other way you could avoid paying ADS would be if you bought a property for less than £40,000, which is unlikely given the buoyant property market in Scotland where the average house price is £143,000.
David Wesley Yates is a chartered tax adviser at Red & Black Accountancy