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PPR - Only property but not living there

What would the capital gains tax position be?

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Client purchased a property in 1991.  They lived there for 7 years and then went to work abroad.  They have since returned and have lived with parents and / or partners since then.  As such, since 1998 the property has either been let out or empty and the client has never returned to the property.  The property is now to be sold.

I am therefore of the opinion that PPR is only available in relation to the initial 7 years plus 18 months and there will also be some letting relief available, of course.

The client's partner is getting involved and stating that their accountant says that as the client has only ever owned this one property, they have the right to nominate it as there PPR regardless of whether or not they have lived there and that the entire gain would be exempt.

I believe this to be incorrect but, given that there could be a substantial gain, wanted to check that I wasn't overlooking something.  Any thoughts would be gratefully received.

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By Kevin Kavanagh
21st Mar 2018 14:03

Ignoring anything else...given it was rented out for some time clearly it couldn't possibly be the PPR for the whole period of ownership.

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Replying to Kevkava:
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By dhughes1975
21st Mar 2018 14:10

My point exactly. The other accountant is suggesting that if only one property is owned by an individual, it can qualify as their PPR regardless of where they actually reside etc.

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By bajones
21st Mar 2018 14:10

What about S222(3)(b)?

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By Portia Nina Levin
21st Mar 2018 14:15

Do you perhaps mean s 222(8)? That might apply.

But if you mean s 223(3)(b) then it can't apply, because condition B hasn't been met.

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By Portia Nina Levin
21st Mar 2018 14:10

You are correct. A nomination is only possible in relation to dwellings that are residences of the individual. The property ceased to be a residence of the individual when they went to work abroad, and it never resumed being a residence of the individual.

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Replying to Portia Nina Levin:
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By dhughes1975
21st Mar 2018 14:17

Thank you Portia.

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By MJShone
21st Mar 2018 14:28

It's a common misconception (though not usually amongst accountants) that if you own only one property, that MUST qualify for PPR relief even if a property that you rent from someone else if your de facto PPR.
Refer the other accountant to CG 64470 and to CG64500 which explains ESC D21. I think that's most commonly used when someone has two homes, one of which is rented, and didn't realise that they might have to elect for the owned one to be their PPR.

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Replying to MJShone:
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By dhughes1975
21st Mar 2018 14:31

Thank you.

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By Akrigg
21st Mar 2018 14:34

You are entirely correct.

I'd like to think that the partner has misunderstood what their accountant is saying. If not, you may have fun pointing out to them just how wrong they are.

Thanks for your question - it has reminded me to post my own s223 query here on accountingweb.

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