Residential letting exemption

Residential letting exemption

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The house has been owned since 1999 and let residentially since then.

The owner is now thinking of selling the house.

If he lives in the house for a month or two, and opts for it to be his PPR, he will be eligible for PPR relief for the final 3 years.

Is there anything to prevent him from also claiming residential letting exemption for the other 2 years, and hence obtaining full relief from CGT?
Robin

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By andymeeson
25th May 2004 13:04

Josie, you are mistaken
The last thirty-six months is treated as deemed occupancy "in any event" by virtue of s.223(2) as long as s.222 applies at all. No requirement for actual occupancy both before and after; merely actual occupancy at some stage during the total period of ownership.

It is the other periods of deemed occupancy set out in s.223(3) - i.e. absences abroad, or absences for work, or up to 3 years for any other reason - which need to be both preceded and followed by a period of actual occupancy.

Beverley's scenario is therefore highly feasible. One caveat, however: the Revenue can disallow relief if the property was acquired with a direct aim of making a gain (s.224(3) applies). For that reason, it is important that the occupation of the property as main residence should be meaningful and substantial - the "month or two" suggested by Robin is unlikely to be acceptable (I would never advise a client to go for less than six months). If possible, the existing main residence should be let or otherwise unavailable during that period, to support the unambiguity of the position.

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By Josie Malloy
25th May 2004 11:32

Are you sure?
To get the 3 years as deemed occupation I understood that the house had to be occupied both before and after the period of letting.

The letting exemption is eleigible for any period of occupation.

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