Does the 3% surcharge bite where a new home and an annexe are purchased together?

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If a client is buying his new main home where the basement has its own entrance he can claim multiple dwellings relief. If he sells his main home thereafter can he reclaim anything?

If he decides to pay the full tax on the purchase then on a reclaim would he require a valuation for the house and basement flat so the reclaim is only on the main house?

 

 

Provided that the second dwelling is ‘subsidiary’ to the main house and he is replacing his only or main residence with the main house the 3% surcharge (on the total consideration) will, in principle, either not be payable or will be reclaimable depending on whether he buys the new home before he sells the old one.

To be ‘subsidiary’ to another dwelling (the ‘main dwelling’):

(1) that dwelling must be situated within the grounds of or within the same building as the main dwelling; and

(2) the amount of the total chargeable consideration for the transaction which is attributable, on a ‘just and reasonable’ basis, to the main dwelling must be at least two-thirds of the chargeable consideration attributable to the main dwelling and to any other dwelling situated as in (1) and forming part of that transaction.

An apportionment of the consideration as at the effective date is therefore necessary.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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