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Tax Insider Tip: Delay In Occupation

22nd Aug 2014
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There is a limited concession to extend PPR relief should the owner not move into his or her only or main residence on purchase. This covers situations where the owner:

  • buys land on which the house is to be built;
  • has the house altered or decorated before moving in;
  • remains in the first property whilst it is still on the market, provided that when that property is sold the second property becomes the owner’s only or main residence.

In these circumstances, the period before occupation is allowed as PPR providing that the period between acquisition and actual occupation is 12 months or less. This period may be extended to a maximum of two years, but only if HMRC is satisfied there is a good reason for the delay in occupation.

If the effect of this relief means that the owner temporarily has two PPR properties, an election is not required.

Example:
Jim purchased 1 Back Lane on 1 January 1990 as his PPR. On 1 June 2012 he purchased 1 Front Lane intending to live there and rent Back Lane.

Unfortunately whilst undertaking some building work he discovered that Front Lane was deemed unsafe and returned to live in Back Lane whilst the repair work was being undertaken. The building work took 18 months; Jim then moved into Front Lane which was eventually sold on 1 June 2015. PPR was granted for the full period of ownership.

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

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