Q I’m looking for advice on the tax implications of buying a property for my disabled parent to live in. My husband and I own our house that we reside in, in Scotland. We also have children and I work part-time.
I own my mother’s home because she cannot get a mortgage. Because of her disability I need to move her closer to where we live so I can help care for her. She cannot work and is therefore not able to get a mortgage in her name in order to move. This means I will need to get a mortgage to buy the property and this will then mean it is classed as a second home and be liable for the additional dwelling supplement. This is an additional tax of approximately £15,000 on the home prices we are looking at.
Is there anything that would change our situation? There is no social housing that can accommodate her situation and her current home is becoming impractical to live in. With deposits and stamp duty I certainly can’t afford this additional £15,000 tax so feel like it’s a chicken-and-egg situation.
DT
A Yes there is a way of avoiding the higher rate of land and buildings transaction tax (LBTT) on a second property in Scotland. But it might have to involve you and your family moving house as well as your mother.
To be eligible for what’s called “multiple dwellings relief” – which lets you off paying the higher rate of property tax on a second property – you have to buy two or more dwellings in a single transaction.
In England, Northern Ireland and Wales, to qualify for multiple dwellings relief from stamp duty land tax (SDLT) or, in Wales, land transaction tax (LTT), you also have to buy two or more dwellings in a single transaction. There are additional rules if you want an annexe or “granny flat” to be considered a separate dwelling.
The less valuable dwelling must be in a part of the same building as the more valuable one and the main dwelling must be worth at least two thirds of the total price paid for the two properties. Other conditions say that the lower value property must be part of the building that your home is in or within its grounds. This what’s referred to as a “subsidiary dwelling”, which must also have its own independent entrance, as well as its own kitchen, bathroom and living and sleeping areas.
This article was amended on 28 December 2023. In referring to conditions for multiple dwellings relief in Scotland, an earlier version mistakenly gave details for multiple dwellings relief that is relevant to England, Northern Ireland and Wales. That information has been clarified.
