Please help

[Holly Town]

I hope someone can help me

I bought a house (A) with my 2 brothers in 2001, then in 2010 I bought my brothers out so the house was solely owned by me. I then renovated it and moved out in 2011 where it has been rented by a handful of tenant's over the years. I moved into a second property (B) I purchased in 2011.

I have this year moved back into the property into Property A in July 2019 and have just received a serious offer to sell, as I have lived there for the passed 5 or so months does that qualify me to not pay CGT? Or would it need to be longer? I would like to sell the property of course now but am not sure whether it I would be shooting myself in the foot by not holding out if there is such a thing as a window to avoid CGT when you move back into the property?

Q2 If CGT is payable regardless and so declared to HMRC, what will they need to see in terms of deductions as I don't think I kept all receipts from 2011, I am panicking about this

Hope someone can help with this

Holly x

[jerome.lane]

Hi, it would very much depend on the quality of occupation rather than the time spent there. You describe moving into the house with an assumed view to setting up permanently there and then received an offer, so on the face of it, PPR could apply. You should also benefit from lettings relief. The below articles should help and if you want further help with your CGT liability (if there is one), then please contact me directly.

https://www.accountingweb.co.uk/tax/personal-tax/cgt-when-a-house-is-not-a-home
https://www.stewartco.co.uk/principal-residence-tax-changes-2/

[Holly Town]

Thanks Jerome

Appreciate the reply. So do you think I am ok to accept the completion date the buyer has suggested of next week?
I haven’t been back at the property a full 6 months does that have any impact?

Thanks so much

Alphie

[etf]

For those old enough to remember MIRAS (mortgage interest relief at source) and temporary absences, Inland Revenue ESC A27 used to suggest that a period of occupation of not less than 3 months was required to establish a property as an only or main residence.

As it is drawn from a different context, no reliance can be taken from the above for your own situation, but it would be nice if our tax system could get rid of grey areas that so often exist, enabling a tax return to be completed without having to take an Open University correspondence course in Tax Case law.

You can raise this issue with any unwanted political door knockers if you want to get rid of them

[Holly Town]

haha! Humour does help even at such difficult times

So am I ok to agree to a completion date then? That's my burning question

thanks guys

Holly x

[etf]

The paragraph below written by the editor of this website details why it is difficult to give you a 100% assurance that your PPRR claim will be successful:

An apparently popular question asked by some house owners is how long they need to live in a dwelling before they can claim private residence relief on its disposal. However, as demonstrated by Dutton-Forshaw (where Cornwall Gardens was the appellant’s only residence for the 52 day period from 5 August 2006 to 26 September 2006) and other cases, there is no ‘safe’ period of occupation. The ‘nature, quality, length and circumstances’ of occupation all need to be considered in determining whether the property was the individual’s ‘residence’, based on the particular facts of each case. Evidence of an intention to occupy the property as a residence is also important.

The following checklist will however give you some pointers of areas that HMRC might review if they were to challenge your claim:

In seeking to establish that a property was intended to be occupied as a residence, it may be helpful to demonstrate having notified banks, government authorities, utility companies, insurers, etc., accordingly. HMRC’s Capital Gains manual (at CG64545) lists some indicators (albeit in the context of establishing a taxpayer’s main residence for main residence election purposes):

• If the individual is married or in a civil partnership, where does the family spend its time?
• If the individual has children, where do they go to school?
• At which residence is the individual registered to vote?
• Where is the individual’s place of work?
• How is each residence furnished?
• Which address is used for correspondence?
o Banks and building societies
o Credit cards
o HMRC
• Where is the individual registered with a doctor/dentist?
• At which address is the individual’s car registered and insured?
• Which address is the main residence for council tax?

[etf]

The paragraph below written by the editor of this website details why it is difficult to give you a 100% assurance that your PPRR claim will be successful:

An apparently popular question asked by some house owners is how long they need to live in a dwelling before they can claim private residence relief on its disposal. However, as demonstrated by Dutton-Forshaw (where Cornwall Gardens was the appellant’s only residence for the 52 day period from 5 August 2006 to 26 September 2006) and other cases, there is no ‘safe’ period of occupation. The ‘nature, quality, length and circumstances’ of occupation all need to be considered in determining whether the property was the individual’s ‘residence’, based on the particular facts of each case. Evidence of an intention to occupy the property as a residence is also important.

The following checklist will however give you some pointers of areas that HMRC might review if they were to challenge your claim:

In seeking to establish that a property was intended to be occupied as a residence, it may be helpful to demonstrate having notified banks, government authorities, utility companies, insurers, etc., accordingly. HMRC’s Capital Gains manual (at CG64545) lists some indicators (albeit in the context of establishing a taxpayer’s main residence for main residence election purposes):

• If the individual is married or in a civil partnership, where does the family spend its time?
• If the individual has children, where do they go to school?
• At which residence is the individual registered to vote?
• Where is the individual’s place of work?
• How is each residence furnished?
• Which address is used for correspondence?
o Banks and building societies
o Credit cards
o HMRC
• Where is the individual registered with a doctor/dentist?
• At which address is the individual’s car registered and insured?
• Which address is the main residence for council tax?

[jerome.lane]

Thanks Jerome

Appreciate the reply. So do you think I am ok to accept the completion date the buyer has suggested of next week?
I haven’t been back at the property a full 6 months does that have any impact?

Thanks so much

Alphie

If you moved into the property with a settled intent for it to be your permanent home, then you should feel comfortable agreeing a completion date and claiming PPR relief. However, this is not specific advice to your circumstances and I strongly suggest you seek advice. I'm happy for you to call me and discuss this if you wish.

[maths]

Were you living in the house between 2001 and 2010?

If not then suspect no PPR.

[Holly Town]

Were you living in the house between 2001 and 2010?

If not then suspect no PPR.

Hi Maths!
Yes I was

Holly