Main Residence Question

Main Residence Question

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We have a client who has a number of residential properties rented out, and who is currently going through a divorce. He is thinking of moving into one of these rental properties the position on which is. Acquired Sept 2001 £90,000 with intention to rent out. Now worth £410,000, on a future sale what are members views as to the capital gains tax position on a future sale say Sept 2006 for £495,000.
Dan

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By CrowtherP
30th Jul 2004 16:51

I don't think that really works
Dan I really do not think one can do that. When asked as to why the taxpayer moved from property no. 2 to property 3, I think the answer has to be a bit more than: 'Well I wanted to maximise my section 223 lettings and PPR relief.' The Inspector can then try and invoke section 224. It has to be the Only or Main Residence first, because the taxpayer resides there. Moving in, with a view to moving out within say 6 months, may bring problems if the taxpayer has done this once or twice, and accessed the OMR relief in section 223.

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By CrowtherP
30th Jul 2004 10:17

Main residence
Well if he resided in the residence for two years then the last three years would be exempted (relieved) under section 223, and so the first two years letting would mean that 2/5ths of the gain would be a chargeable gain. Lettings & Taper relief will be available.

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By AnonymousUser
30th Jul 2004 12:08

six months in each
If he is really keen to reduce his CGT bills and has some flexibility, he may want to consider living in all his rental properties six-months at a time...

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