Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 Schedule 13 paragraph 8

Off-plan purchases and the higher rates

Schedule 13, paragraph 8 explains when an off-plan or pre-construction property purchase is treated as involving a dwelling for the purposes of the higher residential rates, even though the dwelling does not yet physically exist.

• Where a contract is substantially performed before a dwelling has been built or adapted, the transaction can still be treated as involving an interest in a dwelling for higher rates purposes.
• This applies where the contract envisages that a building (or part of a building) will be constructed or adapted for use as a dwelling, but construction or adaptation has not yet begun at the point of substantial performance.
• Substantial performance of a contract — such as paying a significant portion of the price or taking possession — can trigger the land transaction tax charge even before legal completion takes place.
• The same rules used elsewhere in the Act to determine whether a property counts as a dwelling (for residential property classification purposes) also apply when deciding whether an off-plan purchase involves a dwelling.