Multiple Dwelling Relief – What is it and how does it apply to Stamp Duty Land Tax?
Multiple Dwellings Relief can be claimed to reduce the Stamp Duty Land Tax payable when purchasing two or more dwellings in a single transaction or linked transactions. When claiming Multiple Dwellings Relief, the size and value of the dwellings does not matter and can also applies to purchases that include non-residential property.
What is a Dwelling?
A Dwelling is a self-contained accommodation (such as a house, apartment, flat) that includes the facilities that would support independent living.
How is Multiple Dwelling Considered?
There are various points that need to be considered, if a building contains more than one dwelling or if there is a dwelling within the grounds of another dwelling. The important points to consider are:
- Does the building have the physical characteristics of more than one dwelling?
- Would the additional dwelling support independent living?
This would require the additional dwelling to have separate facilities for cooking, bathing, lounging and sleeping.
The lack of separate meters and bills does not mean that a building would not be suitable for use as a separate dwelling
- Has the additional dwelling been occupied as a separate dwelling?
How is Multiple Dwelling Calculated?
To calculate the Stamp Duty Land Tax payable when claiming relief for Multiple Dwellings, you first divide the total amount paid for the properties by the number of dwellings. Then work out the tax due on this figure and then multiple the calculated tax figure by the number of dwellings.
For example, you buy a house with a self-maintained granny annex for £500,000.
£500,000 divided by two is £250,000. You will then calculate the Stamp Duty Land Tax for £250,000. Once you have calculated the tax figure for £250,000 you will need to multiply the figure by two.
If the transaction is for an additional residential property, Higher rates of Stamp Duty Land Tax may apply. In this instance it would be prudent to contact a Tax Advisor or the HMRC to calculate the Stamp Duty Land Tax payable.
If you are considering purchasing a property, please do not hesitate to contact our Conveyancing Team at BTMK Marcus Baum on 01702 346677 who will be happy to assist or at [email protected] Our website address is www.btmk.co.uk
Yolanda Hollis, the author of this article, and a residential property specialist in our team at BTMK Marcus Baum can be contacted at [email protected] or by telephone on 01702 346677
