PPR & primary residence nomination sense check

[benja]

I am trying to navigate this maze of PPR and CGT. I need to check whether it is in our best interests to nominate one of our houses as our primary residence because we are going through some quite significant changes to our property ownership at the moment. Some background:

• My wife and I sold our primary residence (property 1) in September 2017. This was joint owned
• We moved into another property (property 2), solely owned by me, which had previously been my primary residence (for 3-4 years) and then rented out for about 12 years.
• My wife owns another flat (property 3) and as part of this upheaval have decided, given that we’ve been married a few years, to move both ‘property 2’ and ‘property 3’ into joint names
• We are in the process of looking to buy a new home (property 4) which will become our new primary residence
• Following all this, we are likely to want to sell ‘property 2’ after we have found and bought ‘property 4’…unless there is work to do, in which case we may stay at ‘property 2’ whilst this is done

Currently, we don’t know how long we are going to be living at ‘property 2’ but have moved in lock, stock and barrel and have made it a home. My questions are:


1) Should we now nominate ‘property 2’ as our primary residence? And, are there pros and cons to doing this if we don’t know how long we are going to be there?
2) Given that it’s uncertain how long we are going to be living at ‘property 2’ and we clearly want to minimise our CGT if we decide to sell, do I need to do anything else to ensure that HMRC are aware of the situation and/or have the info they need to understand the situation?

Thank you for any advice that you may give.
Benja

[bd6759]

Nominating a property does not make it a residence. First and foremost it has to be a residence. When you have 2 residences, then you can nominate one to be your main one. Two residences means you live in them both: perhaps one during the week and the other at weekends.

The first question is whether property 2 is a residnce. It seems to be a stop gap whilst you find another place. So although you live there, it might not actually be a residence.

You don't say what you doing with property 3 so we dont know if you have none, one or two residences.

Property 4 will become a residence from the day you buy it, as long as you move in within 12 months with the intention that it is to be a residence.

A residence is where you intend to permanently live (permanent means as far as forseeable).

[benja]

Thanks for your response bd759.

Re property 3, it's been rented out since we moved in together and will continue to be rented out.

I appreciate that merely nominating a property does not make it a residence. For clarity, property 2 is our current home - all aspects of our life are centered around it, including post, schools, cars, banks etc so I am relatively confident should we be required to prove that we live here, we could. We have no idea how long we will be here (particularly given the housing market at the moment) and so, we have embraced property 2 as our home. Nevertheless, I am trying to work out what the ramifications of nominating it (or indeed, not nominating it) as our primary residence now given that at some point it is likely that we will move. So, given the situation, we are here for the foreseeable.

I suppose my question really is, whether (if at some point in the future we decide to sell property 2) there is a financial advantage to us having nominated property 2 now against not nominating it.

[bd6759]

Nominate property 2 as opposed to what? You have sold property 1, you dont live in property 3, and havent bought property 4. You don't have 2 or more residences, so you can't (and have no reason to) nominate.

Property 2 might be a residence, but at the moment that is in doubt as It is a stop gap. Living in it doesnt make it a residence. If it is a residence, the period in which you live in it will be exempt from CGT, and added to the first period. If you give half to your wife, she might to "inherit" your first period of PPR exemption.