PPR

[Brightonian]

My client is unmarried and lives and works in London. She moved in with her partner 15 years ago, letting out her previous residence in Hackney - it has been let ever since. She owns no interest in her partner's property.Five years ago she bought a property in Sussex, in her sole name, which the couple use at weekends. She is planning to sell this. I believe that this can be treated as her PPR as she has no other residence available to her - the Hackney flat is let and the house she lives in is owned by her partner. I know that there is ESCD21 which means that, if she occupied the London property on a short tenancy, she would still be able, despite the time lapse, to make an election to nominate the Sussex property and put the matter beyond doubt but I understand that she cannot do this because she occupies the Sussex property on a mere licence. Is there any problem with this situation ? I should be grateful for any help members of the forum can offer.

[maths]

She owns the Sussex property. She does not therefore occupy it on licence.

Her Hackney flat is let out and hence doesn't qualify as a residence.

She owns no part of the property she occupies with her partner (i assume not married and not a civil partnership?).

In practice her Sussex property should qualify as her sole residence.

[Brightonian]

Thank you, Maths. Common sense told me that SHOULD be the answer but I've learned the hard way that you can never be sure with tax! Thank you for setting my mind at rest.

[Lee Young]

Surely ownership is irrelevant to determining main residence status?. Isn't where this client lives her main residence?

The fact that she does not own where she lives simply means that she will not in any event be taxed on its disposal. The Sussex property could be her main residence but surely as a question of fact it is not, as it is not where she lives. She is unable to elect now and presumably did not elect when the property was bought.

Maths I am sure can convince me that my reading of this is incorrect.....

[maths]

The critical point is that for TCGA 1992 s222 purposes in order for a property to qualify as a residence the individual must have a legal or equitable interest in the property. A licence is insufficient.

Thus, although her partner's property in which she spends time might in layman's terms qualify as a residence, it does not for s222 purposes so qualify as she stays there under licence only.

Hackney in principle qualifies as a potential residence but as it it let out it does not for the letting period qualify as a residence.

She owns Sussex which can therefore qualify as a residence.The question therefore arises as to whether this is in fact the case. This depends upon intention at date of acquisition and so-called "quality" of occupation. Theoretically, HMRC might argue that despite ownership Sussex fails to qualify as a residence if, for example, her occupation doesn't have in their the requisite "quality". However, in practice, this would I suspect be unlikely as she has owned it for 5 years and spends every week-end there and she is not married or in a civil partnership with her partner (although, of course, I am not in possession of all the facts).