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Hi,

We bought a property in 2000 with a view to retiring there in the future, but have lived in another house (home) ever since purchasing that one in 1995.

We have always rented the "retirement" property to tenants without ever having lived there.

We are now in the process of retiring and would like to live between both properties for a period (maybe two years) before finally selling (or more likely renting) our existing home for perhaps a further 5 years until we are completely sure we do not wish to return to it.

I read that an election for PPR can be made up to two years after the combination of properties changes, but it isn't clear when the date for CGT calculations actually runs from.

Is it the election date (letter to IR declaring PPR) or the date you started living in both?

From my calculations it is financially beneficial to have the retirement property recognised as our PPR immediately we retake possession, so see no benefit in delaying the election to the IR.

Views greatly appreciated please and any comments on anything I may have missed please.

Many thanks,

The clock starts running for making the election broadly from when the individual has a new combination of residences. i.e. when you start to use both residences.

The clock starts running for making the election broadly from when the individual has a new combination of residences. i.e. when you start to use both residences.

I am not convinced that there is a "new combination of residences" because a person changes the use of one of his properties - unless you can point to the specific legislation that allows this.

IMO a new combination of residences can only apply if the individual either sells or acquires a new property such that his/her combination of residences changes and the 2 year time limit runs from that date. Interested if you can point out the error of my ways.

The clock starts running for making the election broadly from when the individual has a new combination of residences. i.e. when you start to use both residences.

I am not convinced that there is a "new combination of residences" because a person changes the use of one of his properties - unless you can point to the specific legislation that allows this.

IMO a new combination of residences can only apply if the individual either sells or acquires a new property such that his/her combination of residences changes and the 2 year time limit runs from that date. Interested if you can point out the error of my ways.

Surely, the legislation refers to when the *residences* change. So changing a property from a residence to a BTL or an empty, unfurnished properly, is a change in *residences* available to the taxpayer.

Indeed, in the past, rented accommodation counted as a residence, and HMRC had a concession waiving the 2 year rule for people who weren't aware that they needed to make a CGT PPR election.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64427

I appreciate what you say and acknowledge the points made by you but am afraid I don’t see it.The concession didn’t define the change of residence as far as I can see. Oh well an interesting take on my next argument with HMRC

Many thanks for the replies.

Assuming this will stick, can you clarify if the CGT allowance starts when the election is made to the ir (ie the date of the letter) or when the combination of properties changed which could be two years earlier. This is pertinent as the fractional charge makes a significant difference to the tax saved if the duration is longer as I understand it please?

With respect to the points discussed re qualifying, surely it must qualify or presumably one could never have a previously rented property as a new ppr otherwise?

Hi,

I think I've found the answer in the CGT manual at
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64530

This states that "It may be apparent that the notice has been given more than two years after the acquisition of a further dwelling house. This doesn’t necessarily mean that the notice is late; the house may not have been occupied as a residence immediately on acquisition"

Also, I think I've also found the answer to my question about the date of the notice v occupation as ppr

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64497

Where is states "A variation of a notice will apply from the date specified in the notice of variation which may be up to two years before the giving of the notice."

I would be grateful if anyone can confirm my understaning as it is a bit complex.

Thanks again

Yes I agree that is great. Cheers

I will certainly use that manual ref e if it comes up as act is a bit more ambiguous Great stuff SteLacca

Your welcome. It's nice to be right once in a while.

I handled an enquiry for a client who had disposed of multiple properties over a period of time, and successfully claimed PPR on all but one (which is why I was familiar with, at least, the way HMRC interpret the legislation).