In this installment of ‘Ask the Expert’ NAPB presents David Stuart from My Local Property Buyer answering questions on the additional dwelling supplement in Scotland.
Q: What is the Additional Dwelling Supplement (ADS) in Scotland, and how does it affect property purchases?
A: The Additional Dwelling Supplement (ADS) is an integral part of Scotland’s Land and Buildings Transaction Tax (LBTT), aimed at moderating the housing market by discouraging the purchase of secondary properties such as buy-to-let homes and second residences. ADS imposes an additional 6% tax on the purchase price of residential properties over £40,000 that are not intended as the buyer’s primary home. This is charged on top of any standard LBTT due. For example, purchasing a secondary property for £100,000 would incur £6,000 in ADS, in addition to the standard LBTT.
This measure targets investors and homeowners looking to expand their property portfolios in Scotland, serving both as a financial deterrent against the accumulation of multiple homes and as a means to generate tax revenue to support housing initiatives. The tax is designed to alleviate market pressure by keeping property prices more accessible for first-time buyers.
It’s important for potential buyers to be aware of specific conditions and possible exemptions linked to the ADS. For instance, replacing a main residence within a set timeframe could qualify the buyer for a refund of the ADS. Buyers need to consider these factors and the additional cost of ADS when planning their property purchases.
Overall, the ADS plays a vital role in Scotland’s housing strategy by promoting equitable distribution and availability of homes, particularly for first-time buyers and residents. Those looking to buy additional properties in Scotland should factor in this tax and consult professionals to fully understand its implications.
If you’d like to learn more about My Local Property Buyer, click the link below:
Meet the Buyer: My Local Property Buyer
