Care should be taken if the property is in the process of being constructed or adapted for residential use because it will then fall within the second part of the definition of residential property. In this case, the intended or anticipated future use will be relevant. In their published guidance HMRC says that:nn“The process of construction or adaptation must be physically underway for this category to apply. HMRC do not consider obtaining planning permission on its own to be part of this process if work on the property in line with the planning permission has not yet commenced at the effective date of transaction (EDT). However, if construction or adaptation has begun at the EDT, then the planning permission would be a strong indicator of what the building is to be used for i.e. whether it should be treated as a residential or non-residential property.nnRelevant properties that are in the process of being constructed will be treated as dwellings at the point where building works on top of the foundations have begun. This will be more than a hole in the ground. Furthermore, preparatory works, including demolition of previous buildings, site preparation etc., are not considered sufficient to determine that construction of a dwelling has started. These may be considered ‘construction works’ but they do not involve the construction of the building for use as a dwelling, as the legislation specifies.”