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Where Taxpayers and Advisers Meet

Main Residence Query

josswallace
Posts:34
Joined:Wed Aug 06, 2008 3:33 pm
Main Residence Query

Postby josswallace » Mon Nov 23, 2020 8:36 pm

For a number of years we owned a house, which was our main residence, and a flat which was rented out under an AST.

When we sold the house we nominated the flat as our main residence. our bank details were transferred to the flat address, we took over the council tax and all utility bills from the outgoing AST tenants, our cars were registered there etc.etc....

At the same time we rented a property nearer to the countryside as we wanted to investigate the local area and it gave us parking for our cars which we did not have at the flat and we were able to utilise the furniture from our house rather than put in in storage and we split our time between the flat we owned, mainly during the week as it was near to London, and the house we rented.

Either we did not have a main/primary residence or one of the two properties we used was our main residence. HMRC has not actually stated which of our properties it considers as our main residence but is refusing our claim for CGT tax relief on the grounds that the flat was not our main residence.

Can anyone give me help/guidance on how to argue the case with HMRC. Any help would be appreciated.

bd6759
Posts:3451
Joined:Sat Feb 01, 2014 3:26 pm

Re: Main Residence Query

Postby bd6759 » Mon Nov 23, 2020 9:54 pm

HMRC do not need to establish which is your main residence. That is your job.

That is impossible to determine from the information given, but at a push your acquisition of a rented house for your main house furniture, the parking of your cars there, and the sale of the flat in a short space of time (I’m guessing because you haven’t given timeframes), would sway me to say that the flat was never your residence.

Residence is a concept of physical occupation for an indefinite period. A house is not a residence because you register your cars there. Council tax is irrelevant because you would be liable anyway. What might be telling is your tenancy agreement at the house and the CT you paid there: was it as a second home, and what did your tenancy agreement say about occupation? Most agreements require you to occupy it as your main residence.

josswallace
Posts:34
Joined:Wed Aug 06, 2008 3:33 pm

Re: Main Residence Query

Postby josswallace » Tue Nov 24, 2020 11:32 am

Many thanks for your input.

I think you could use the same arguments re our rented house. Does one of the two properties automatically become our main residence for the period we had both or could it be considered that we had no main residence

josswallace
Posts:34
Joined:Wed Aug 06, 2008 3:33 pm

Re: Main Residence Query

Postby josswallace » Tue Nov 24, 2020 11:33 am

In the case of sa a member of parloianment, or indeed any one who owns two homes, can they choose which of the two properties to nominate as prime residence irrespective of time spent there etc.

bd6759
Posts:3451
Joined:Sat Feb 01, 2014 3:26 pm

Re: Main Residence Query

Postby bd6759 » Wed Nov 25, 2020 1:16 am

Yes I could. But it is for you to show that the relief applies. You have sold the flat but still live in the rented place.

It is perfectly possible to have 2 residences, but a house or flat that you own and spend time at is not necessarily a residence. On the other hand a house that you buy in the country and live in every other weekend could be a residence. It wouldn’t be your main residence, but you could nominate it as such. A residence is a place you intend to keep. If you reside in it as a stop gap whilst it is on the market, it is not a residence.


The CGT rules apply to MPs. The purpose of nomination is for their expenses. They make their own expense rules.

maths
Posts:8088
Joined:Wed Aug 06, 2008 3:25 pm

Re: Main Residence Query

Postby maths » Wed Nov 25, 2020 6:04 pm

It is possible for someone to have no residence which qualifies for favourable CGT .

Occupation of a property does not mean that it is automatically a residence.

If two separate properties do each qualify as a residence for CGT purposes then the taxpayer can choose/elect which he/she wants to be treated as their main residence. HMRC cannot challenge such an election.

The key question is always does the occupied property constitute a residence.

josswallace
Posts:34
Joined:Wed Aug 06, 2008 3:33 pm

Re: Main Residence Query

Postby josswallace » Thu Nov 26, 2020 9:23 pm

Clearly, if we only had one property there would not be an issue.

HMRC are claiming that occupany of the flat does not constitute residency, yet in all the articles I have seen some sort of permancy is required. As the house we rented had already been applied for by the property company to be demolished and the let was for 12month/6mth period there was clearly no permancy there.

If both the above statements are true then I presume that we did not have a residency anywhere during that period. If that is acceptable practice fine but if it isn't then one of the two properties must have been our prime residence as I don't believe you can have two prime residencoes at the same time.

How can the above be resolved.

bd6759
Posts:3451
Joined:Sat Feb 01, 2014 3:26 pm

Re: Main Residence Query

Postby bd6759 » Fri Nov 27, 2020 12:54 am

Did you move in to the flat with the intention of living there for the foreseeable future?

We would have the same issue if you only had one property. To qualify for relief it has to be a residence. You are fixing on the words “only or main” and applying that to a property. That is wrong. First you have to establish which properties are residences, and then decide which is the only or main residence.

It’s not sufficient to say one property couldn’t be my residence therefore the other must. It your scenario, neither were residences.

josswallace
Posts:34
Joined:Wed Aug 06, 2008 3:33 pm

Re: Main Residence Query

Postby josswallace » Sat Nov 28, 2020 7:41 pm

The intention was to move into both properties. We used the rented house initially most of the time and the flat as a pied a terre when we wnt up to London. I don't really understand why both
properties aren't residencies at the time we were in them. I know people who own a town house and a country retreat which is seldom used but I understand they are both residencies and the owner has the option to chose which is used for CGT.

bd6759
Posts:3451
Joined:Sat Feb 01, 2014 3:26 pm

Re: Main Residence Query

Postby bd6759 » Sun Nov 29, 2020 5:04 pm

As I said above, It is perfectly possible for a person to have 2 or more residence. A London home and a country retreat, or even a country mansion and London pied-a-terre. But that is not your scenario so there is nothing to be gained by saying “But,but, but what about..?

The house you owned was not your residence when you were renting it out. The question that needs determined is whether it became your residence. You say that it was your intention to keep it and use it as an occasional haunt. So you will have evidence that some unforeseen circumstance meant you had to change that intention and sell it.

You haven’t bothered to give us any time frames, but I’d hazard a guess that it was marketed not long after the tenant left. That makes it hard for you to assert you intended to keep it.


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