Home movers to be given more time to recover property tax

The Scottish Government propose to extend the time within  which property purchasers can recover property tax. If you buy a new home before you sell your existing home, you have to pay a property tax. This tax is called the Additional Dwelling Supplement (ADS). The ADS currently runs at 4% of the purchase price – and that’s in addition to any normal Land & Buildings Transaction Tax. If you would like to view some examples of how this property tax is applied, please click here.

Whilst this property tax was brought in to deter buy to let investors enter the first-time purchaser market, it has had some unintended consequences. For instance, if you buy a new house but haven’t sold your existing house, you have to pay ADS. However, when you eventually sell your original house, you can claim the tax back. You can only reclaim this within a certain period of time.

How long to  I have to reclaim ADS?

Currently, buyers who are caught by this can only claim back the ADS within 18 months of it being paid. However, the Scottish Government propose to extend to 27 months. The emergency measures also allow the Scottish Government to extend the reclaim period should this prove necessary.  It’s good to know that buyers are being given extra time to claim back this property tax

If you would like to know more about buying a house, please click here.

Note: this provision for the extension  of time to reclaim ADS has now come into effect with the passing of The Coronavirus (Scotland) (No.2) Act 2020 which received Royal Assent on 26th May 2020 with some important changes. The period of reclaim is now 36 months but only applies to those buyers who purchased their new main  residence between 24 September 2018 and 24 March 2020.