PPR elections for a married couple

PPR elections for a married couple

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A married couple jointly own their principal private residence which is fifty miles away from their Ltd Co business.

They jointly acquire a second home near to the business and the husband lives there Mon to Fri each week.

He wants to nominate the second home as his Principal Private Residence as he spends most of his time there.His wife doesn't spend any time in the second home.

Does this make sense? What are the pitfalls?

Ann

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Euan's picture
By Euan MacLennan
26th Feb 2008 16:30

Chapter and verse
The rule about only one PPR for a couple living together is set out in s.222(6) and the rule about notifying which of 2 or more residences is the main one is set out in s.222(5) TCGA 1992.

As Pete has indicated, the election must be made within 2 years of there being 2 residences (i.e: from the date of occupation of the second home as a residence if that was later than the date of its purchase) and reversed almost immediately to minimise the period during which PPR relief will not be available on the main home. However, if it is really true that "the main home is never going to be sold", a capital gain will never arise on it (the most certain way of avoiding CGT has always been death) and so, you should make the second home the PPR permanently until it is sold.

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By User deleted
26th Feb 2008 16:01

I know you are right but.....
Thanks Euan I knew you would get to the point- clear concise advice as always.My gut reaction was that a married couple cannot have separate PPRs.But can you point me to your source- chapter and verse, as I've not been able to find it spelled out anywhere.

The clients sole objective is to avoid/minimise a CGT charge on the eventual sale of the second property on retirement in say 10 years time, as the main home is never going to be sold.

Presumably 'electing for the second home to be the couple's PPR at some stage' must be done within two years of acquisition by both spouse,ie, soon (and then reversed?) to open up the possibility of PPR for the last 36 months of ownership.

Who knows what could have happened to CGT rules in ten years time!

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Euan's picture
By Euan MacLennan
26th Feb 2008 12:38

The rules
A husband and wife living together, which means not legally separated or not actually separated in circumstances likely to result in permanent separation, can have only one PPR. The husband cannot have the second home as his PPR while the wife retains the main home as her PPR.

It does not matter that the wife does not live in the second home. The couple may elect within 2 years of the husband taking up weekly residence in the second home for that home to be treated as the PPR. Otherwise, the main home remains the PPR.

That said, electing for the second home to be the couple's PPR at some stage, however briefly, makes sense because they would then be entitled to PPR relief for the last 36 months of ownership (plus the elected period if not within the last 36 months).

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By User deleted
26th Feb 2008 12:27

Carefully
He can enter a nomination of owning a new combination of properties either of which could be his residence. A married couple can not have two PPR and the residential home is a present the factual PPR. However nominating the second home as PPR with the two year window can move the PPR but remember it exposed the original PPR to CGT liability. This can be minimised by electing the second home in say month 23 and a week later moving it back, this re triggers the two year clock. Enter Property Nomination on the search window of the HMRC and it will all become clear as mud. Regards Peter

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