Do first-time buyers pay stamp duty?

When it comes to purchasing a property in Scotland, it's important to understand the intricacies of the tax system. One common question that arises is whether first-time buyers are required to pay stamp duty. In this guide, we will delve into the topic of stamp duty for first-time buyers in Scotland.

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Understanding Land and Buildings Transaction Tax (LBTT)

In Scotland, the tax that is equivalent to stamp duty is called the Land and Buildings Transaction Tax (LBTT). LBTT is a tax that is typically payable when buying a property in Scotland. However, first-time buyers may be eligible for relief under certain circumstances.

LBTT First-Time Buyer Relief

The Scottish Government introduced LBTT first-time buyer relief in June 2018. This relief is available to individuals who are purchasing a home that they intend to occupy as their main residence. It is important to note that the relief is only applicable to residential property transactions.

Defining a First-Time Buyer

To determine whether an individual qualifies as a first-time buyer for LBTT purposes, specific criteria must be met. A first-time buyer is defined as an individual who does not currently own or has previously owned a property in Scotland, the rest of the UK, or anywhere else in the world. It is important to note that joint purchasers must both meet the relevant criteria to qualify for LBTT first-time buyer relief.

Exceptions and Considerations

While LBTT first-time buyer relief is generally applicable, there are certain exceptions and considerations to keep in mind.

Inherited or Gifted Property

If an individual inherits or receives a property as a gift, this will be taken into consideration when assessing their previous ownership status. It is important to consult with legal professionals to understand the implications of such cases fully.

Trustees and Executors

If someone owns a property as a trustee or executor, they are not considered an existing owner for the purpose of LBTT first-time buyer relief.

Main Residence Requirement

To be eligible for LBTT first-time buyer relief, the property being purchased must be intended as the buyer's main residence. While immediate occupation is not necessary, the buyer must demonstrate a clear intention to occupy the property in the future. It is worth noting that LBTT first-time buyer relief is not available when a property is purchased for purposes other than as a main residence, such as buy-to-let investments.

Claiming LBTT First-Time Buyer Relief

To claim LBTT first-time buyer relief, individuals must submit a claim through Revenue Scotland, the tax authority responsible for the collection and management of Scotland's devolved taxes. The relief can be claimed either when submitting the initial LBTT return or as an amendment to the return. Claims can be made online or by completing a paper form.

Conclusion

In conclusion, first-time buyers in Scotland may be eligible for LBTT first-time buyer relief when purchasing a residential property. The relief is subject to specific thresholds and rates, and certain criteria must be met to qualify as a first-time buyer. It is important to consult with legal professionals and adhere to the guidelines set forth by Revenue Scotland when claiming LBTT first-time buyer relief. By understanding the nuances of the tax system, first-time buyers can navigate the process with confidence and make informed decisions when purchasing their first home in Scotland.

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