Is there a minimum timescale someone has to 'live' in a second home in order to qualify the last 18months as PPR?
I would have thought there should be a minimum duration but cant see anything stated in legislation
Thanks
Replies (10)
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In short, no
There is no set time limit, it is based on the quality of occupation. In practice, I'd say 6 months is advisable and record keeping is important - council tax, utility bills, voting registration, addresses with the bank, employer and elsewhere.
A PPR election might be in point.
There isn't
and putting live in inverted commas would suggest that it might not pass scrutiny.
As above, do it properly:
do move indo notify HMRCdo change addresses for bank, employer etcdon't have it registered as vacant for council taxdon't have utility bills that show no usage over winter monthsdon't put it on the market before you move in, or probably shortly thereafteretc
Great list
and putting live in inverted commas would suggest that it might not pass scrutiny.
As above, do it properly:
do move indo notify HMRCdo change addresses for bank, employer etcdon't have it registered as vacant for council taxdon't have utility bills that show no usage over winter monthsdon't put it on the market before you move in, or probably shortly thereafteretc
In theory, ten minutes is more than enough but, i reality, you have to have time to do all this.
Paul - thanks for this list.
Talking from memory
A recent case held that 8 months was about right but only if you follow the advice given above
It seems to be a loophole that the last 18 months of ownership can be claimed even when the residence in that property has been shorter, has HMRC ever said why the claim is not limited (by the legislation) to the shorter of the last 18 months and the actual occupation?
Because IIRC
the legislation says the last 18 months in any event where the property has been used as the main/principal residence at any time during ownership.
read the question
the legislation says the last 18 months in any event where the property has been used as the main/principal residence at any time during ownership.
The question was not what the legislation says but why it says it.....
I believe
it's just to encourage people to move homes or, at least, not to avoid moving in case they incur CGT.
I seem to recall reading that it started out as 36 months due to a property crash and was never changed after the market picked up (until recently), but I'm not certain.
Tricky to draft
Just to be clear, it is not for HMRC to say why something is a particular way in the legislation. They are subject to the way the legislation is drafted the same as everyone else.
The provision for the last 18 months (previously 36 months) is in the legislation is to take into account that a house might take some time to sell. If someone has to move out prior to sale, they could attract a capital gain simply due to a slow market otherwise. The period represents the longest an ordinary sale is believed to take. EDIT As Duhamel said, the previous 36 months was due to a historically depressed housing market. The reduced period was long overdue as that is a very historical situation.
The reason why it is not limited is almost certainly down to that being trickier to legislate fairly than you might think. For example, a person moves into a house but then gets a job offer in another part of the country 6 months later. The house then takes 18 months to sell. As they always intended it as a permanent home, would it be fair to give them a capital gain in that situation?
It is overly generous, but almost certainly because ensuring the genuinely innocent don't get caught out was the priority when writing the law.
As others have said, the legislation is silent on any minimum qualifying period.
My usual advice is "more than 12 months", if possible. But it will depend on the exact cirumstances of each case.
From memory, the shortest period to qualify for PPR is ~ 6 weeks.