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PPR on a development?

PPR on a development?

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Briefly, client lived in house for a year (definitely PPR for that period), moved out and let as a house, then developed it himself into 3 flats, which were let for a few years and are now being sold.

As he's never lived in the flats I doubt PPR can be claimed, but PPR plus lettings relief would save quite a bit of 28% CGT so thought I'd check I'm not missing a trick here?

Thanks for looking!

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By Paul D Utherone
05th Feb 2016 09:18

Try reading
CG64760 - Private residence relief: change in use and the following paragraphs

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By nogammonsinanundoubledgame
05th Feb 2016 10:02

@ Paul

Somewhere at the back of my mind I recall being taught that where a capital asset is appropriated into trading stock there is a deemed CGT disposal at market value, which MV is then acquired by the trade, despite there being no change in ownership.  That being the case, would not PRR be available on any uplift in value between purchase and appropriation?  Maybe I have it all wrong.

With kind regards

Clint Westwood

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By Paul D Utherone
05th Feb 2016 10:33

I think the term development here is a red herring

There was a property that qualified for PPR, then it was let then it was converted to three that were let, rather than being developed for immediate sale as a trade.

Add to that I linked to the wrong bit of the manual. I should have referred to 

CG65265 - Private residence relief: realising gain: conversion into flats and the examples that follow

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By birdman
06th Feb 2016 09:27

PPR on a development

Thanks Paul, exactly what I was looking for!

Clint, thanks for idea - I had a similar one in reverse recently, where developers "disposed" to Fixed Assets as decided to let long-term, so your back of mind thoughts are correct. The present client wanted to let the flats rather than develop for sale, but is now nervous about BTL market and wants out whilst market still fairly buoyant.

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