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PPR – Two houses owned
David explained a personal property situation in his query of 15 September 2006. Property A had been owned for many years and was sold in April 2006 with full CGT private residence relief due. Property B had been acquired in July 2004. Substantial improvements had been carried out to it and the family moved in to the property in February 2006 after moving out of Property A.
Would PPR relief apply to Property B for the period July 2004 to February 2006?
Euan McLennan replied to this query, and stressed that full PPR would only be due if the property was sold before July 2007. This is on the basis that the property is now a PPR and the final 36 months of ownership are exempt. Part of the period between July 2004 and February 2006 would also become exempt if the property was sold between July 2007 and February 2009, also on the 36 months exemption basis.
The owners of property B should note that, whenever the sale of the property takes place, from July 2007 onwards, the 36 months final period exemption will apply. They should also note, that in the event of there being any ‘taxable period’, that the cost of the ‘substantial improvements’ should be regarded as part of the cost. If there is a taxable gain at all, remember that non-business asset CGT taper relief may be due, and that the CGT annual allowance is set finally against any taxable chargeable gain.
Previous editions:
Newth Talks Tax - Employed – Not self employed
Newth Talks Tax - Hotels and the PPR exemption
Newth Talks Tax - CGT implications of PPR/letting
Newth Talks Tax - Handling the inspector
Newth Talks Tax - GPs receipt of donations
Newth Talks Tax - Capital allowances
Newth Talks Tax - October
Newth Talks Tax - September