Does only or main residence relief apply where three flats are converted into one?


I am looking at the situation where someone is looking to purchase a property that is currently divided into 3 flats. Their intention is to convert this into one property which will become their main residence and they will then sell their current main residence.

I see no value (other than from a cashflow point of view) in them claiming multiple dwellings relief (‘MDR’) as they will have to make an additional payment on the conversion. On the purchase of the flats they should pay the 3% surcharge.

My question is whether they will be able to reclaim the 3% surcharge if they sell their main residence within 3 years of the purchase of the flats and whether they can claim the surcharge on the whole of the purchase price?



I agree with what you say about MDR. Only or main residence (‘OMR’) relief can only apply to the ‘purchased dwelling’ not ‘dwellings’ at the effective date. In any event, where three dwellings are purchased in a single transaction then unless at least two are ‘subsidiary’ to the third OMR relief is not available.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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