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Where Taxpayers and Advisers Meet

PPR relief question? and CGT Liability

pencilpot
Posts:11
Joined:Tue Dec 22, 2015 12:34 pm
PPR relief question? and CGT Liability

Postby pencilpot » Mon Aug 08, 2022 1:18 pm

Hi,

I’m wondering if anyone can help me with some knowledge.

I purchased my home in 2008 and have lived there since then. I got married in in 2018

Me and my wife built a house nearby (35/40 minutes further away), The build was started pre-COVID-19 and obviously had a few delays due to this. We managed to move in, early November 2020. The House was completed and building control sign off on 20th October 2020

We lived there for 14 months but decided to move back closer home to assist with childcare. We had another baby boy, and my parents live close to our original home. Dashing round the corner was no longer an option

We moved out in Jan 2022 and moved back to the original home. The original home was planned to be sold when we moved out, but we were recommended to tidy it up redecorate it a bit to obtain the best sale price.

We are now back in this original home and happy for now, the oldest has now been accepted into a local nursery.

I wondered what would the stance be regarding PPR and I believe I would have to elect this within 2 years of moving in I believe?

If election is not made will I lose the PPR on the new property? Any advice on what I need to do would be appreciated.

If the above is registered as the PPR for the time we lived there, I believe it would be CGT exempt, if we look to sell it. Which I think we may well look to do

When would be the best period to declare it as the PPR as i believe there is 9 months le way also? I read the following on a previous page (by @someone)

"You have two years to backdate a PPR nomination so (unless it takes more than 2 years to sell) if you want to avoid any CGT on this transaction but maximise PPR, you should wait to make the PPR election once you have a date for exchange and back dated to 9 months before the exchange date on the sale (assuming it's more than 9 months from purchase of your new home)"



Thanks in advance for your help, let me know if you need any more clarification

pencilpot
Posts:11
Joined:Tue Dec 22, 2015 12:34 pm

Re: PPR relief question? and CGT Liability

Postby pencilpot » Mon Aug 08, 2022 1:22 pm

My main concern is

When would be the best period to declare it as the PPR as I believe there is 9 months le way also - or do i declare the whole 14 month period?

pawncob
Posts:5089
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: PPR relief question? and CGT Liability

Postby pawncob » Mon Aug 08, 2022 3:11 pm

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64510
With a pinch of salt take what I say, but don't exceed your RDA

pencilpot
Posts:11
Joined:Tue Dec 22, 2015 12:34 pm

Re: PPR relief question? and CGT Liability

Postby pencilpot » Mon Aug 08, 2022 5:33 pm

Thank you for the reply i have had a read of that link..

Further detail on the above post and I'm not sure if this changes the landscape - Once again than you for any feedback and advise provided here



Original home purchased in 2008 Property A and lived in there since.

Husband and wife bought Property B in 2017 with a view to building a new home on the land

Property B was rented wile plans were agreed etc. Property B remained rented  

Property C was built in October 2020 on part of the land of property B (started 2 years previous COVID-19 etc adding to the delays)

In November 2020 Property C was moved into as a PPR until Jan 2022. Property A that was the previous Home was updated for sale

Property B remained rented always.

In Jan 2022 Property A was moved back into for family reasons and more local support.

Property C will most likely now be sold, as will Property B at some point i imagine.



The question is will Property C be entitled to PPR for the 14 months it was occupied and if sold not be subject to CGT at all?



In terms of intention to live there and indeed genuine occupation there is no issue there.

I’m just not sure of the potential liability/ PPR Exception

Any advice if greatly received.

pawncob
Posts:5089
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: PPR relief question? and CGT Liability

Postby pawncob » Mon Aug 08, 2022 7:42 pm

Well that complicates things.
Are you involved in the building trade?
With a pinch of salt take what I say, but don't exceed your RDA

pencilpot
Posts:11
Joined:Tue Dec 22, 2015 12:34 pm

Re: PPR relief question? and CGT Liability

Postby pencilpot » Tue Aug 09, 2022 9:51 am

Hi Pawncob no im not

bd6759
Posts:4256
Joined:Sat Feb 01, 2014 3:26 pm

Re: PPR relief question? and CGT Liability

Postby bd6759 » Tue Aug 09, 2022 3:24 pm

Based on what you have said:

Property A was PPR until October 2020.

At that time you moved into Property C with the intention that you would live there for the foreseeable future, and that you would sell Property A.

Property C became your PPR in October. No election is necessary because you only had 1 residence. You had moved out of A with the intention to sell.

In January 2022 you moved back into Property A with the intention to live there permanently. Property A once again became your residence. Property C is not a residence, so no election necessary.

Your difficulty will be proving that you intended to reside in Property C when clearly Property A was more suitable. I think that will be difficult.

pencilpot
Posts:11
Joined:Tue Dec 22, 2015 12:34 pm

Re: PPR relief question? and CGT Liability

Postby pencilpot » Tue Aug 09, 2022 4:26 pm

Thank you for your reply that ahs been very useful.

with regards to

"Your difficulty will be proving that you intended to reside in Property C when clearly Property A was more suitable. I think that will be difficult"

I'm comfortable with the above as it was what genuinely happened and i have all records or everything we moved to the address and all communications for all sorts, car insurance, bills, NHS and doctors moved, deliveries, banks. HMRC, Council tax etc.

My concern is also around when it would need to be elected, I appreciate your point above if its matter of fact no election is required. But does the time the property was starting to be built need be included in an election. I believe if it was built within a 24 month period and moved into (we were at 18 looking at the records) then that is fine also, but have heard that build period may need to be elected for PPR or is that not the case?

Once again thank you all for your insights and replys

pencilpot
Posts:11
Joined:Tue Dec 22, 2015 12:34 pm

Re: PPR relief question? and CGT Liability

Postby pencilpot » Tue Aug 09, 2022 4:30 pm

Also in terms of moving back there Property A - We had family reasons too - Family support for us once we had 2 small children and family illness also - In terms of evidencing and validation of the reasons why I'm not concerned about that.

Just want to make sure all else is completed correctly and I understand if there is any liability and if so what that may look like.

bd6759
Posts:4256
Joined:Sat Feb 01, 2014 3:26 pm

Re: PPR relief question? and CGT Liability

Postby bd6759 » Sat Aug 13, 2022 11:14 am

A property cannot be a residence until you have occupied it as a residence. A building site is not a residence.

Re PPR, those family reasons would all have been prevalent before you moved to property C. To an outsider it seems that you never intended it to be your residence but have carefully planned it to look as if it were.


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