PPR Relief Problem

PPR Relief Problem

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Looking for some advice regarding a predicament a family member finds herself in. She lived in a housing authority house for some time and decided to buy it under a discount incentive scheme. During the purchase period her child became subject to bullying which led to her being harrassed leading her to vacate the property.

She proceeded with the purchase due to the discount and moved into rented accomodation. Under the purchase agreement she was unable to sell within three years so she rented the property out in the meantime.

She now wishes to sell the property and buy in another area, however there is a relatively large capital gain inherent in the first property.

Would the fact that she lived in the property for a number of years before purchase and intended to live there when purchased be enough to secure PPR relief, even though she has never actually lived there during her period of ownership ?

If she moved into the property for a short period before sale would this help, or would it be treated as temporary accomodation.

Any advice would be greatly appreciated.

Thanks
Eamonn

Replies (3)

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By noradh
23rd Feb 2007 15:13

Helpful material
You will find ESC D21 and CG64500 helpful in this connection.

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By J Lessels
23rd Feb 2007 16:47

Deposit Paid
Did she pay a deposit towards the purchase of the property before vacating it? S222 (7) TCGA is key here as the period of ownership starts when she made the first capital payment for the house.

Going back to live there sounds very dangerous even to save tax, but I think if the facts were put before the Inspector, he would not accept that she was really going back there to live.

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Euan's picture
By Euan MacLennan
23rd Feb 2007 11:37

Unfortunate
I am not aware of any concession in the legislation which extends the period of ownership backwards to a period of renting the property prior to buying it. Perhaps, someone else knows of one.

Failing that, her only hope is to move into the property as her principal residence. It does not have to be for a long period, but it does have to be genuine - which it probably would be if she gives up her current rented accommodation before looking for a new property to buy.

If she establishes it as her only private residence, she will be entitled to PPR relief for the last 36 months of ownership and to the lettings exemption for the prior period of letting up to the lower of £40,000 and the amount of PPR relief.

This topic keeps coming up. You may be able to find some other threads if you search for them.

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