What Is Multiple Dwellings Relief?
Multiple Dwellings Relief (MDR) is a tax relief that can help reduce the amount of Stamp Duty Land Tax (SDLT) payable on transactions involving multiple dwellings. It applies to purchases of two or more residential properties in one transaction and has been designed to encourage investment in residential property developments. MDR works by reducing the total SDLT rate for a purchase of two or more dwellings from the normal residential rate to 3%. This relief applies as long as all of the dwellings are located in England and Wales. MDR is not available for purchases made in Scotland or Northern Ireland.
MDR can be used by both individual buyers and those acting on behalf of corporate entities, such as limited companies or limited liability partnerships. MDR is available for transactions involving a single buyer and seller, as well as multiple buyers and sellers.
MDR may be claimed once the purchase has been completed and submitted to HM Revenue & Customs (HMRC) via an SDLT return. The relief must be claimed within three months of completion, so it’s important to ensure that all parties involved in the transaction are aware of its existence.
MDR can be a valuable tool for those looking to invest in multiple residential properties, as it helps to reduce the amount of tax payable on these purchases. However, it is important for buyers to understand exactly how MDR works and to make sure that all the necessary information is provided to HMRC when claiming relief. This will help ensure a smooth transaction and that any potential tax savings are maximised.
What counts as a “dwelling” for multiple dwellings relief purposes?
For the purposes of MDR, a dwelling is defined as any building or part of a building which is used or intended to be used for residential purposes. This includes houses, flats, and maisonettes. It also covers properties such as holiday homes and second homes that are not intended to be occupied on a permanent basis. Properties purchased with the intention of being let out are also included in the definition. However, any property that is used solely for business or commercial purposes is not eligible for MDR. What Are The Benefits Of Multiple Dwellings Relief?
One of the main benefits of MDR is that it can help to reduce the amount of Stamp Duty Land Tax (SDLT) payable on purchases of two or more dwellings. This can be particularly beneficial for those wishing to invest in property developments, as it may help to reduce the overall cost of the purchase. MDR also helps to encourage investment in residential properties, which may help boost the housing market and provide additional homes for people looking to buy or rent.
Finally, MDR is available to both individual buyers and those acting on behalf of corporate entities, making it accessible to a wide range of potential purchasers. In conclusion, Multiple Dwellings Relief can be a valuable tool for those looking to invest in multiple residential properties by helping to reduce the amount of Stamp Duty Land Tax payable.
When can I get Multiple Dwellings Relief?
Multiple Dwellings Relief applies to purchases of two or more residential properties in one transaction. The relief is only available for transactions involving dwellings located in England and Wales, and cannot be claimed for purchases made in Scotland or Northern Ireland. In addition, the relief must be claimed within 4 years of completion and can be used by both individual buyers and those acting on behalf of corporate entities.
What Is A ‘Linked’ Transaction?
In order to be eligible for Multiple Dwellings Relief, the purchase must involve a single buyer and seller. However, SDLT law allows linked transactions to qualify, where a separate but related transaction is completed at the same time. A linked transaction is one in which each dwelling involved in the purchase has been acquired from different sellers and/or by different buyers. In order to be eligible for MDR, the linked transactions must take place within a 4 year period and involve dwellings located in England or Wales. In summary, Multiple Dwellings Relief is available for purchases of two or more residential properties which have been acquired from a single seller or multiple sellers.