Establishing PPR for returning non resident

GXH · Postby **GXH** » Fri Jun 27, 2003 8:06 pm

I own 2 properties in the UK and will be returning to take up permanent residency after 9 years as a non resident in November 2003. I bought my last property just over two years ago. Can I claim either of the properties as my main resedence when I get home despite the fact that I have not made the election within the first two years of ownership?

accountant@uktaxshop · Postby **accountant@uktaxshop** » Sat Jun 28, 2003 8:43 am

RJ,

Just to be aware, and apologies if you are doing this already, in terms of your existing properties, if these have been rented out you will be liable for any incomes generated while you are outside the UK, and will need to complete some tax returns for the relevant years. Without going into too much detail, there is actually a separate office that deals with non-residents, and from then on in you fill in the normal return. You still get all the UK allowances, and if you have no actual tax liability in any year, filling in the old forms is advised as it shouldnÂ’t trigger any fines, but would help you straighten your affairs on your return.

Regarding when you return to the UK, there is no problem electing one of the properties as your main residence. Please be aware however in terms of CGT, there may still be some liability.

Take the scenario where you sell the main residence after a further 2 years. In total you will have owned the property for (say) 4 years, 2 of which as your main residence. You will still be liable for 50% of any gain as this was the period it was not your main residence.

Some careful tax planning is advised to reduce any potential liability.

Regards

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

accountant@uktaxshop · Postby **accountant@uktaxshop** » Sat Jun 28, 2003 1:55 pm

For some reason I have failed to mention the rather fundamental point that gains arising before you become resident, (as you have been non-resident for more than 5 years) will not normally be chargable to CGT.

So on your return you will have one property which is you PPR (no CGT), and one which is an investment property (liable to CGT).

Ian McTernan CTA · Postby **Ian McTernan CTA** » Tue Jul 01, 2003 9:34 am

Some planning is required here BEFORE you return to the UK, and will also be dependent on when you bought the properties- you mention one but not the other, and also where you are currently residing, not to mention current value and purchase price and declaration of the income in your home state as well as here.

You may be liable to CGT on sale of either property, or not, and PPR relief may not apply at all dependent on what happens when you return.

I would be happy to discuss in considerably more detail if you contact me as below (fees will apply), but I would seriously recommend some planning now.

Ian McTernan CTA
McTernan Associates Ltd
ian@imcternan.com