Genuine occupation

Posted by Ding Dong PM | on Mon, 17/10/2011 - 16:56 4445 27 comments | report

A potential new client I met this morning has fallen out with his old accountant (fees - they have set a minimum £750 for a tax return (all clients with £+++ for additional pages) when he previously paid £350 ish !) so when I say fallen out I mean decided to switch and so I am one of three being beauty paraded.

One thing he has been advised to do and is in the process of doing is moving house into his investment property to save CGT. He naturally asked me my thoughts and said he would not do it if I thought he shouldn't.

Basically, he has been advised to move out of main home (£500k value purchased for £100k 20 years ago) into rental property he owns two miles away, (£300k value, purchased £100k 7 years ago) for 2/3 years. (Client is happy to do this, has no kids etc) and then move back and hold onto both - in the interim letting out the former main home on a commercial basis.

The reasoning being that he would significantly reduce the CGT liability on investment property (2/3 years residency plus final three years deemed) and benefit from lettings relief, whilst not paying any CGT on main home when sold as lettings relief would cover the 2/3 years out of 20+ when the property was let out

I can see no problem with this and told the chap I wanted to double check any HMRC restrictions on this before advising fully (if he engaged me only of course.....) but it seems this switch could save £40k in CGT......

Any immediate observations in case I have missed anything would be most welcome.

Comments

There are 27 comments. Login or register to view them.

Genuine Occupation

Roland195 | Mon, 17/10/2011 - 17:07

yes he will move in

Ding Dong | Mon, 17/10/2011 - 17:13

I don't think this should be an issue

BKD | Mon, 17/10/2011 - 17:37

Have a look at all the recent Tribunal reports on this

ACDWebb | Mon, 17/10/2011 - 17:45

Thanks

Ding Dong | Mon, 17/10/2011 - 20:16

If my memory serves me correctly

The Innkeeper | Tue, 18/10/2011 - 10:33

He knows there won't be full PPR on the rental property?

Ermintrude | Wed, 19/10/2011 - 12:53

Need to elect

shoshana | Wed, 19/10/2011 - 15:56

Is an election needed.....

Ermintrude | Wed, 19/10/2011 - 16:24

Belt and braces

BKD | Wed, 19/10/2011 - 16:29

For all you mention to apply

mackthefork | Wed, 19/10/2011 - 20:26

Why 6 years?

BKD | Wed, 19/10/2011 - 22:37

Why will he get 3/8ths

mackthefork | Wed, 19/10/2011 - 22:55

What about Section 224(3) TCGA

dangart | Thu, 20/10/2011 - 06:36

3/8ths

BKD | Thu, 20/10/2011 - 08:17

Call me pedantic or call me old fashioned

dwgw | Mon, 31/10/2011 - 13:13

Possibly

ACDWebb | Mon, 31/10/2011 - 13:45

The clue is in the title

BKD | Mon, 31/10/2011 - 15:07

Then it should be "private residence relief"!

dwgw | Mon, 31/10/2011 - 17:05

PPR

George Attazder | Mon, 31/10/2011 - 17:30

Cause for celebration

dwgw | Tue, 01/11/2011 - 18:22

Sorry to burst your bubble, George, but ...

BKD | Tue, 01/11/2011 - 19:11

Damn...

George Attazder | Tue, 01/11/2011 - 21:49

Double Damn...

George Attazder | Wed, 02/11/2011 - 12:55

PPR for mortgage interest

Red Leader | Wed, 02/11/2011 - 13:04

The fight continues

dwgw | Wed, 02/11/2011 - 14:17

some say PPR, some say OMR....

LMT | Thu, 03/11/2011 - 14:10