Commentary on Sections Schedule 5 - Higher rates residential property transactions Replacement of main residence exception
201.Paragraph 8 sets out that where the dwelling purchased is intended to be a replacement for the buyer’s only or main residence then that transaction is not a higher rates residential property transaction if it meets the conditions listed in paragraph 8. These include that the buyer intends the new dwelling to be their only residence, the buyer or the buyer’s spouse or civil partner sell another dwelling during the period of 3 years before the effective date of the transaction of the new dwelling, that the buyer or their spouse or civil partner must not retain a major interest in that sold dwelling, that sold dwelling was also the buyer’s only or main residence during that 3 year period and at no time during the time between selling their old property and acquiring the new property has the buyer or spouse of civil partner acquired another dwelling with the intention of it being their only or main residence.
202.A similar set of rules apply where the new main residence is acquired before the old main residence is sold. In these cases the buyer may reclaim the element of the higher rates charge once their former main residence is sold (so long as that sale takes place within 3 years from the effective date of the transaction involving the new main residence). However, the condition which requires the buyer or their spouse or civil partner not to retain a major interest in their previous only or main residence does not apply to the spouse or civil partner if they are not living together as defined in paragraph 25(3) on the effective date of the transaction concerned.