Two Homes

ross · Postby **ross** » Fri Jul 25, 2003 12:34 am

I have two flats - one which is in joint names the other is in my own name.

What I want to do is limit my liability from a tax point of view if I decide to sell both properties and buy an single larger house.

I live in one flat during the week which i have designated as my main property and the other one which my partner lives in - i live in at the weekend.

Can anyone advise me what I should do either now or when i decide to sell?

accountant@uktaxshop · Postby **accountant@uktaxshop** » Fri Jul 25, 2003 2:08 am

Ross,

The flat you live in now (assuming you have always done so) is presumably your PPR, and so exempt from CGT.

The other flat, your partner lives in is half exempt (her half), but your half could have a liability.

It is not clear whether you bought this together, but I will assume this is the case.

If you declared the "weekend" flat as your PPR at a decent interval prior to the sale, the final three years of ownership could become exempt from CGT. (The IR may ask to see that this is a true state of affairs - ie that you have moved in and it is your PPR.)

The first flat would not become liable to CGT, so long as you sell up within three years.

I suggest the first thing to do is to work out the gain on your half of the weekend flat, and then work out what it would be if you switched your PPR's as above.

If you need some further help, please let me know.

Regards

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436

ross · Postby **ross** » Fri Jul 25, 2003 2:20 am

James,

thanks for the reply.

I used to live in the weekend flat up until March 2002. Then I bought the other flat because of working away all week with a new job and being unable to commute.

The weekend flat was purchased in October 1999.

If I simply transferred ownership of the weekend flat to my partner would this solve the CGT issue or is there another way?

I intend to sell both at sometime and move to a new flat together.

accountant@uktaxshop · Postby **accountant@uktaxshop** » Fri Jul 25, 2003 3:50 am

more facts emerge!

This is the trouble of answering a forum Q - you are rarely in possesion of all the facts.

In which case you will probably find that the "weekend" flat is actually your PPR - so you need to do the election the other way around, so that the new flat is your main residence !

You have 2 years from when you aquired the second property to make this claim - ie you are within the time limit.

You will be able to sell the "old" flat up until March 2005 with no CGT arising, and the "new" flat at any time.

You could transfer the "old" flat to your partner, although if there is a mortgage on it there will be stamp duty arising....

Regards
James Smith