PPR and Ownership

[Whale]

Dear Tax Advisors,

Could anyone advise the implication of below situation? Many thanks.

Situation: Charlie and Denise were going out when Denise moved into Charlie's home (Property A) as their only and main residence. A year later, Charlie and Denise purchased another property (Property B) together and moved there as their main home. Another year down the line, Charlie and Denise married and Charlie added Denise's name onto the property A. A few years later, they decided to sell property A.

Question: Could Denise claim PPR on property A and therefore claim letting relief?

[Peter D]

No. She did not live in the property as an owner so no PPR or LR.
It gets worse, as She was added to property A then he looses out on 50% of his PPR but will still be able to claim LR.
Regards Peter

[Ian McTernan CTA]

This is a fine example of why PPR relief is never as straightforward as some people would think.

Transfers between spouses always complicate matters.

As the property was Charlie's only or main residence and the property was transferred after they were married (and Denise did not have any other property at that time) , then when they sell the property PPR relief should be available.

The calculation of the available relief could get a little complicated, as transfers between spouses are on a no gain/no loss basis and the spouse is deemed to 'inherit' the base cost and reliefs of the other spouse on the transfer.

You might struggle a little to get the claim accepted and wording will be important (as always in tax), but worth a try!

[Peter D]

" then when they sell the property PPR relief should be available."
When he added her to property A they were married but living in property A so she will not be entitled to PPR or LR on Property A.
Regards Peter