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Where you have more than one property it is possible to choose which one is your PPR at any given time, provided the elected property is used as a home. However, a person can only have one PPR at any one time.

By ‘flipping’ the properties, it is possible to maximise relief and ensure that the last 18 months for each PPR qualify for relief (see Tip 85.

Example:
John has a flat in the city that he bought for £100,000 in April 2000. In April 2003 he buys a family home in the country for £400,000. He lives in the flat in the week and the country home at weekends and during holidays.

He elects for the country home to be his PPR.

He sells the country home in July 2015 for £700,000, buying a larger property nearby. As the property has been his PPR throughout the gain is tax-free.

He also sells the flat in July 2015 to fund the larger property, making a gain of £150,000. He is able to claim PPR in respect of the periods from April 2000 to April 2003 and also for the last 18 months.

Had John not flipped his properties so that his country home was his PPR, he would not have been entitled to PPR on the sale and the gain of £300,000 would have attracted capital gains tax.

Although some of the gain on the flat is taxable, the overall tax bill is much reduced.