CGT implications of holiday homes

[Helen]

I have just bought a cottage in the South West which we will use solely for family holidays (ie not main residence.) However this is my only house ownership (I live with my partner but do not co-own the house). If I should decide to sell the house after 2 years am I liable for CGT or can this still be counted as my main residence? If I am liable for CGT, can I change all my billing addresses (mortgage, tax office etc) to the holiday home address to avoid this?

[steve@nunn-hayward.c]

Hi Helen,

There is certainly scope to present a good case for claiming the Main residence exemption, but there are as you would expect a number of hurdles to jump.

Use of an election to the revenue may not be relevant, in view of the fact you only own 1 property. It needs exploring.

What will you be doing with post generally or Council tax ?

I suspect that it will be the practical matters that will determine if a valid claim can be supported.

I would be pleased to take matters forward if you sent me your contact details.

Regards

Steve Cook

[taxman]

I would consider it unlikely that a claim for exemption as a main residence could be sustained in the event of an inland revenue enquiry based on the facts of your query.
The revenue will look at the facts of the situation and would assess to what extent you occupy the 'holiday home' as a main residence. One of the key determinants would be the number of days spent in occupation. Merely transfering post without an actual change in occupation would be unlikely to satisfy the Inspector of Taxes.
This is not to say that the Inspector will take the point, although I have seen one recent client that has been subject to an detailed enquiry in relation to this exemption.
One possible option may be to utilise a claim where an individual has more than 1 residence. This allows a taxpayer to effectively choose which property is to be treated as his/her main residence. Such a claim can be made within 2 years of the purchase of the second property. I should therefore advise you/your advisers to consider this issue in further detail.
Alternatively if you e-mail me your telephone number I would be pleased to look into this issue for you.
Regards,