Interesting PPR Question

Interesting PPR Question

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The client sold a piece of land at the bottom of the garden of his main residence to a developer.

The developer used this land as the back garden of a new house he built to sell to the public.

As it turned out the client reserved the house and ended up buying it as it gave him control over who lived at the end of his garden!

All this happened in 2001.

The client let the new house out and is now about to sell.

The question arises. As the land was once used as PPR albeit for his garden (which being 1/2 an acre in total would qualify for PPR all else being equal) and was subsequently 'let' would the usual PPR relief (proportionate using the value of the land against the price of the house as a guide) plus £40,000 letting exemption apply on the sale.

Other useful information
The title to the garden effectively never changed hands, in effect, although was altered to create a new title for the new property.

The price of the new house was adjusted (discounted) to take into account the value of the garden land which was already owned by the client. The actual new house (i.e. the bricks and mortar part) was built on adjoining land that had never been owned by the client.

Any theories would be gratefully received.

Also do you think we will be able to run this past HMRC before the Tax Return is submitted?

Thanks
Byron Heard

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By AnonymousUser
14th Nov 2006 09:34

No PPR Relief in this case

Section222(1) TCGA 1992 says PPR Relief is available only if the land sold is used as (part of) the seller's PPR garden at the time it (ie the land) is sold.

In this case the land being sold has not been used as the PPR's garden since 2001.

Therefore no PPR Relief is available on the sale.

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