PPR

[1q]

I own two properties, property 1 bought 7 years ago and property 2 bought 11 years ago.

If I sell property 1 I can use PPR as it is my main residence. If I subsequently sell property 2, when will I be able to apply PPR for that property?

I have lived in property 2 in the early 1990s. There is no urgency to sell propery 2 so I could wait for x years untill PPR can be applied. And, I could move into property 2 after I sell propery 1. What scenario will ebale me to use PPR for property 2?

Many thanks...

[accountant@uktaxshop]

Unfortunately PPR isnÂ’t as simple as exempting the property you live in at the time in full.

It works on the actual time you have lived in the property as your main residence, plus some extra reliefs that are available.

If you are able provide some more information we may be able to help you further:

What periods did you live in each of the houses ?
What are their purchases and current values?
What have the properties been used for when not living in them (ie rental, holiday home etc)

Regards

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

[Nigel Lord]

1q

If both properties have been available to you as main residences (i.e. they are habitable, unlet and you spend a proportion of your time there on a regular basis) either of them could possibly your Principal Private Residence (PPR). Under normal circumstances, you would need to elect for one of the properties to be your PPR, however this is not possible if both properties has been available to you for more than 2 years. The PPR would be determined as a matter of fact (i.e. which of the properties is the one where you spend the majority of your time).

PPR Relief is available on your PPR for the period of residence, and the last 36 months of ownership.

Assuming that you have only used property 2 as you PPR throughout the period of ownership, you will entitled to 100% PPR Relief while you live there and for the last 36 months of ownership, irrespective of whether it continues to be a main residence.

If you move the property 1, it will only be treated as your PPR from the date that you first become resident and, either cease to have use of property 2 as a main residence, or make an election.

PPR Relief is given as a fraction of the gain based on qualifying months divided by total months of ownership. It would therefore be impossible for you to qualify for 100% PPR Relief on property 1. However you may be entitled to some or a all of the following reliefs and deductions:

Costs of sale (legal and agency fees etc.)

The purchase cost

Costs of acquisition (legal and search fees, survey fees, stamp duty etc.)

Indexation allowance (to 31 March 1998)

Improvement expenditure

Indexation on improvements (if undertaken prior to 31 March 1998)

PPR Relief (for the period that it is your main residence and the last 36 months of ownership)

Residential Lettings Relief (up to £40,000 if let)

Capital losses arising in the same tax year

Taper relief (from 1 April 1998)

Unused annual exemption(s)

Losses brought forward

If you would like help in computing your exposure to CGT please contact me.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852