In most cases, there will be no difficulty in establishing
whether or not a property is residential property. An intelligent
decision making tool is available on the HM Revenue & Customs
website at
this link which will help customers to reach a
decision in straightforward cases.
Use at the effective date of the transaction overrides any
past or intended future uses for this purpose. If a building is not
in use at the effective date but its last use was as a dwelling, it
will be taken to be ‘suitable for use as a dwelling’
and treated as residential property, unless evidence is produced to
the contrary.
Undeveloped land is essentially non-residential but may be
residential property if, at the effective date, a residential
building is being built on it.
Where, at the effective date, an existing building is being
adapted or marketed for, or restored to, domestic use, it is
treated as residential property.
A building that is used only partly as a dwelling may
nevertheless be suitable for use wholly as a dwelling. Its overall
suitability will be judged from the facilities available at the
effective date. For example, if two rooms of a house were in use as
a dentist’s surgery and waiting room at the effective date,
HMRC would nevertheless normally consider this property suitable
for use as a dwelling.
Cases involving bed and breakfast establishments or guest
houses will be treated on their merits. However, a bed and
breakfast (B&B) establishment which has bathing facilities,
telephone lines etc installed in each room and is available all
year round would be considered non-residential.
Where only a distinct part of the building is used and
suitable for use as a dwelling, that part will be residential
property for the purposes of the relief and the mixed use
provisions will apply – see
SDLTM20080.
