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MDR? What it is and how it can save you money?

When a qualifying taxpayer buys more than one dwelling in a transaction, there is a multiple dwelling relief (MDR) which can be claimed for the stamp duty land tax (SDLT).

In this article, you will find out what MDR (Multiple dwelling relief) is and how it can help you save money!

What is Multiple dwelling relief?

When a qualifying taxpayer buys more than one dwelling in a transaction, there is a multiple dwelling relief (MDR) which can be claimed for the stamp duty land tax (SDLT).

There must be at least two dwellings to be a transaction or can be a single dwelling if it’s part of a linked transaction, where multiple property purchases are between the same buyer and seller.


Multiple dwellings relief and the 3% surcharge?

There is a 3% stamp duty land tax surcharge if you already own a home, this can be charged upon additional residential property. Homes that are purchased to replace current homes are not included.


How can Multiple dwelling relief save you money?

You can reduce the rates for the average cost of each dwelling for Stamp land duty tax if you make a claim for Multiple dwelling relief.

Depending on the value of the dwelling, you may or may not have to pay the 3% higher rate for extra dwellings.

For example, an extra dwelling could be an outbuilding or a granny annexe.


In terms of SDLT, how is a dwelling defined?

Dwelling can be a place of residence, whether that is a house or a flat.

In terms of SDLT, a dwelling is a building if it is used as, suitable to be used as, or is being adapted for, a single dwelling.

Please refer to HMRC’s SDLT multiple dwellings manual here.


Under SDLT, What Is A ‘Linked’ Transaction?

If several property transactions are processed between the same buyer and seller, then this is known as a ‘Linked Transaction’.

In a series of linked transactions, buyers should understand that the value of all the properties is added together before the rate of SDLT is applied, presenting a higher rate of tax rather than on the individual properties in the transaction.

CapEx Associates are tax experts with years of experience. For more information on MDR under SDLT, our team are readily available to help with all inquiries and other related queries.

Get in touch and we would be happy to give you more information and advice.

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