Reliefs for transfers involving multiple dwellings: Example 10
An individual acquires the freehold of six semi-detached houses. Six months later, he sells two houses to an unconnected third party, who combines them into one. After another six months he sells another two houses to his wife who combines them into one. After a futher six months he combines the two remaining houses into one and sells it to an unconnected third party.
The first sale is not an event for the purposes of FA03/SCH22/PARA6. It brings the relevant period to a close in respect of those houses, because the sale is to an unconnected third party, so the subsequent combination of the two houses into one does not affect the original purchaser’s relief.
The second sale is not an event for this purpose. However the relevant period is not affected (because the sale is to a connected person) and the subsequent combination of the two houses into one is an event in respect of the original purchase. The amount of tax due is recalculated on the basis of five dwellings - that is, the combined houses, the two which were previously sold on and the two remaining in the original purchaser’s hands.
The combination of the remaining two houses into one is an event for this purpose. The amount of tax due is recalculated on the basis of four dwellings - that is, the two combined houses and the two sold to the unconnected third party.
The sale of the last remaining house brings the relevant period completely to a close, eighteen months after the transaction.