Multiple Dwellings Relief (MDR) can save you a substantial amount of Stamp Duty Land Tax (SDLT) when buying multiple properties. This tax break was established in 2011 to encourage residential property investment and has proven popular since then.
The rate of SDLT applied to a single or series of linked transactions is determined by multiplying the average value of all purchased dwellings by their number.
What is MDR?
Multiple Dwelling Relief (MDR) helps property buyers who purchase two or more properties, or buy in multiple transactions, reduce their stamp duty land tax (SDLT) costs. MDR works by calculating the tax due on each dwelling and multiplying this figure by the number of dwellings acquired to arrive at a total SDLT charge.
HMRC introduced MDR as part of their 2011 stamp duty reforms to promote property development and investment. MDR works by calculating the tax charged on each dwelling’s average price, then multiplying this figure by the total number of houses sold – this brings down the overall SDLT payable to either 1% or 3% depending on individual circumstances.
MDR can be a valuable tax savings tool for property owners. However, it’s essential to be informed about the intricacies of MDR and SDLT. Consulting an experienced tax lawyer is recommended in order to determine how best to claim MDR benefits.
How can I claim MDR?
Multiple Dwelling Relief (MDR) was implemented in 2011 to encourage investment in residential property. It reduces Stamp Duty Land Tax charges on multiple linked transactions by calculating an average price for each dwelling and applying appropriate SDLT rates to that figure instead of individually valuing each property.
Land Transaction Tax returns allow for the claim of Medical Device Relief. If, after filing your LTT return, you realize that you should have claimed MDR but have not done so, you have up to 12 months from filing date to amend it.
Claims for medical device reimbursement (MDR) must take into account various factors, such as privacy, living area and kitchen facilities. It’s worth noting that HMRC have intensified their efforts to monitor MDR claims and take measures to prevent it from being misused by unscrupulous firms.
Can I claim MDR if I have a mixed use property?
If you purchase multiple properties, such as a house and cottage, in one transaction, you may qualify for multiple dwelling relief (MDR). MDR works by calculating the average price of all the properties involved and then applying Stamp Duty Land Tax (SDLT) rates to this figure.
HMRC recently issued guidance that states MDR and the higher surcharged rate of SDLT should not always interact. Therefore, if you claim MDR on linked transactions such as buying a property with a granny flat, then oftentimes the 3% surcharge can be avoided.
Due to the wording of the SDLT legislation, a mixed use transaction does not qualify as a higher rates transaction. A higher rates transaction is defined as one which “consist(s) of or includes” non-residential property and does not fall under this definition.
Can I claim MDR if I have a freehold reversion or headlease?
If you own a freehold reversion or headlease, you may be eligible for multiple dwelling relief (MDR) on your Stamp Duty Land Tax bill. This could reduce the amount of tax due; however, it’s best to seek professional advice for this process.
The answer to this question is yes, however there are a few points to be aware of.
Before issuing any leases from a reversionary title, make sure that it is registered and the lease written on it. If not, take steps to register it quickly.
Be aware that a headlease may not qualify as an interest in the dwelling for MDR purposes if it was granted with a term exceeding 21 years.