PPR and Letting Relief


Postby Flash on Fri Oct 05, 2007 6:58 am

I would be very grateful if someone might be able to clarify the following:

In a situation where both PPR and Letting relief applies, does the PPR relief take precedence?

Scenario: Property owned for last 8.5 years, Actual occupation = first 7 years
Let out for last 18 months
Reason - bought 2nd house and couldn't sell first, now they wish to sell.

My assumption is that PPR would apply, under the last 36 months rule, and that we wouldn't need to apply letting relief unless it was let out for longer than 3 years. Am I correct?

Thank you very much for any reponses, your time is appreciated.
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Postby wamstax on Fri Oct 05, 2007 7:21 am

As the property was occupied as PPR for part of the last 36 months there would be no CGT as the property would be fully covered by the PPR & the last 36 months rules. Letting relief would not need to enter the equation and your reasoning is correct
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Postby Flash on Fri Oct 05, 2007 7:37 am

Thanks very much! Nice to know I'm not going barmy afterall!
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Postby Peter D on Fri Oct 05, 2007 7:39 am

Yes I agree. However as a matter of providing information bear in mind that 'overlap relief' rule does not allow PPR and Letting Relief for the same period and as you correctly comment PPR takes president. Regards Peter
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Postby Flash on Fri Oct 05, 2007 7:55 am

Thanks again.
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Postby King_Maker on Sat Oct 06, 2007 12:33 am

Lettings Relief is not relevant, as the last 36 months of OWNERSHIP is always deemed to be your PPR (assuming it has been your PPR for any prior period).

See Matthew Hutton's article of August 2005 where Lettings Relief falls within last 3 years of ownership :

http://www.taxationweb.co.uk/articles/article.php?id=215 ]
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Postby Flash on Sat Oct 06, 2007 10:26 am

Thanks very much for your replies, the article is very interesting.
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Postby Flash on Sat Oct 06, 2007 11:01 pm

Actually there is one further point. The second house during its first 18 months is not covered by PPR (since the old house was the PPR).

If they now elect for the PPR to apply to this property having sold the old house.

There would presumably be CGT due on this first 18 months when the property is eventually sold.

Is there any relief for this first 18 months in the second house?
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Postby King_Maker on Sun Oct 07, 2007 1:49 am

Presumably, the second house is where you have been living for the past 18 months?

If so, it is (and always has been) your PPR.

First property has PPR status for its last 36 months of ownership also.
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Postby Peter D on Sun Oct 07, 2007 7:03 am

he owner qualified the first property as their PPR and it attracts the PPR 36 month exemption. In addiotion the second property which they appear to live in is exempt form CGT as it is the PPR by a matter of fact, They own and live there. Regards Peter
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