Example:

Courtney owns a small cottage in Inverness which she lives in as her main residence. She decides to purchase a holiday home in Oban for £60,000.

At the end of the day that is the effective date of the transaction, Courtney owns two dwellings therefore the ADS will be payable unless her cottage in Inverness has a market value of less than £40,000. A market value of less than £40,000 will mean that it is discounted as being owned by Courtney for the purposes of the LBTT(A)(S)A 2016.

A reasonable estimate of the market value of her cottage on its own is determined to be £35,000. However, Courtney, as proprietor of the cottage, has a right of pre-emption over a field adjacent to the cottage, which field is at the edge of current housing development. As the field has the potential to have lucrative development value, Courtney's right of pre-emption is valued at £50,000.

As the overall market value of the cottage plus the right pertaining to the cottage is £85,000, the ADS will apply to Courtney's holiday home purchase transaction.

Last updated: 
6 April 2016
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