PPR

PPR

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I bought my second property in October 06 for £103,000. In the next couple of months i will be selling it for £130,000. At this present moment its rented out and has been so since December06.

Ideally i would like to nominate this porperty as my PPR. My question is should i ask the lodgers to empty the property and write to Tax Inspector of my intentions. What establishes a person`s PPR?
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Euan's picture
By Euan MacLennan
25th Oct 2007 11:31

Principal Private Residence
1) First, the property must be your residence. If you did not live in the second property between buying it in October and letting it in December 2006, it was not your residence. While it is being fully let, it cannot be your residence. If you do not live in it after the tenants ("lodgers" implies that you also live there) leave, it will never be your residence and questions of making elections and claiming PPR relief are irrelevant.

2) It is not enough just to spend a few days in your second property to establish it as your residence. It is the quality of occupation that matters. You need to be genuinely living there. If your first property is in town and the second in the country, you could genuinely live in the first during the week and the second at weekends. If the second is local to the first, dual residency is less plausible. You would have to move to the second property, notify the authorities (principally, HMRC) of your change of address and preferably, let out your first property. The second property would then be your only residence and you would not need to make an election. You would be entitled automatically to the last 36 months of ownership as a period of residence for PPR relief.

3) Only if you have two simultaneous residences, can you make an election as to which is to be regarded as your PPR.

4) Finally, if your intention in buying the second property was mainly to realise a profit on selling it within a short period, you are not entitled to PPR relief on it. Full stop.

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By ACDWebb
25th Oct 2007 11:19

A nomination is completely irrelevant
until you have two properties available to you and used as residences.

Just moving the lodgers out will not be enough, you actually need to live there as well for some period of time.

Then you are down to quality of use of the property as a residence as there is no specified time requirement in legislation.

That said you already have the intention to sell (though possibly not yet marketing the property until the tenants are out) and case law would suggest that any use would be insufficient to establish the property as your PPR - see Goodwin v Curtis CA 1998

In view of the dates and general use, it is also possible that a PPR claim might be attacked on the grounds that the preoperty was acquired with a view to the gain - TCGA 224(3)

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