PPR election - what do you think?

PPR election - what do you think?

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Client inherited a share of her parents' house on death of his father.  Mother continues to live there and still owns 1/2 of the house.

My client lives in Spain with spouse and children.  When he comes to the UK he stays with his mother.  This would be for a few weeks each year, but not many.

Do you think a PPR claim on the UK house would be acceptable?

Replies (7)

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Euan's picture
By Euan MacLennan
04th Dec 2013 14:08

Not his residence

"My client lives in Spain with spouse and children.  When he comes to the UK he stays with his mother."

That says all you need to know.  His Spanish home is his only residence.  He just stays in his mother's residence when he visits the UK.

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By tonycourt
04th Dec 2013 14:30

Probably not a residence

As Euan said; it doesn't sound like the property is your client's residence.

If they occupy it as their home and not just a place to stay, a "main residence" election would be possible. But it doesn't sound like that's the situation.  

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By taxhound
04th Dec 2013 14:39

Thanks

That is what I thought and said, but then wondered if I was being unreasonably strict.

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By King_Maker
04th Dec 2013 14:59

It does not sound like a "residence" to me either.

 

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By pauld
04th Dec 2013 15:40

Why not worth a go?

If its within 2 years of inheriting the residence, is it not worth putting an election in to HMRC. They will neither agree nor disagree with it. Its like buying a second home say by the sea which you go and stay in for a week now and again. There would be nothing stopping you making an election in that situation so what's the difference here?

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By cfield
04th Dec 2013 16:11

Needs to be ongoing residence

There has to be a degree of permanence and continuity for it to be a residence. In bald terms, a weekend retreat would qualify but a holiday home wouldn't. Depends really how often he visits the UK and stays with his mum. Once a month might do it. Any less frequent than that and he could not really describe it as a second home.

If HMRC challenged it, the usual criteria would fall under the spotlight. Obviously he wouldn't be on the voting register if he lives in Spain most of the time, but things like keeping personal possessions there, decorating the house, tidying the garden, paying for the running costs, having post addressed there, etc, may help.

Important that it's an ongoing arrangement even if his stays are brief and irregular. Most people have an ongoing relationship with their mum so no problem there I assume.

Might be worth making an election before the 2 years is up and revoking it after a month say. Nothing to lose by doing that apart from a month on his Spanish home. HMRC would merely acknowledge it and only argue the toss if and when he eventually sells the house.

This might be academic though if he is tax resident in Spain. Only a problem here if he returns to the UK within 5 years of last being tax resident. Otherwise any disposal (whilst he's not UK resident) would be exempt.

What he really needs to do is check the tax rules in Spain. Do they tax non-Spanish gains? Are they as generous as us re nominations and the last 3 years rule? It might be the fire he needs to worry about rather than the frying pan!

 

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By Jim100
10th Dec 2013 00:52

Good timing...

The recent autumn statement released the next day (5th December) may have a bearing on the question above

1) Non Residents will pay CGT from April 2015

2) PPR reduced from 36 months to 18 months from April 2014

Possibly may be worth selling the property now rather than later

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