Property A--owned many years, lived in as a main residence.
Property B--Acquired Jan 05 and was renovated for 12 months
March 2006-moved out of Property A into B. A is now up for sale
Q.If say in 10 years time they sold property B then would the whole of the period of ownership be exempt and covered by main residence(assuming A was sold say in 2006)
Just concerned that they did not live in property B between Jan 05 and March 2006 and hence this would not be exempt?
Many Thanks for any help
david
Replies (4)
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Elect for B to be main residence from acquisition. You are within the two year window.
There will be no tax on sale of A because the last 36 months' ownership of a house that has been the PPR are treated as exempt.
The renovation period should not be a problem.
What if no election made?
Thanks Phil for that.
If no election was made could there be a tax problem with property B ie The renovation period?
The opposite view
The PPR election is used to identify which of two (or more) properties in which you reside (hence 'residence') should be treated as exempt from CGT.
If you haven't resided in property B until now (as it appears that you haven't) then how can you say that it was your PPR from Jan 2005. I'd say there is no grounds for a valid election.
Consider ESC D49
For main residence relief to apply for a particular period, the property must be a ‘residence’; therefore if there is a delay between acquisition and the property becoming a residence then the period of delay does not qualify for relief.
However, by Extra-statutory Concession D49, HMRC will treat the period of delay as being a period of residence provided that:
* the delay is because a dwelling is being built; or
* the delay is because of the continuing occupation of a previous residence pending sale; or
* the delay is because alterations or redecorations are being carried out.
In these circumstances HMRC will then allow extended main residence relief if:
* the delay does not exceed a year, or
* a maximum of two years if there are good reasons for the delay; and
* at the end of the period the property becomes the main residence.