Non-residents investing in UK residential property and UK residents investing in non-UK property must satisfy a ‘day count test’ in relation to that property. An owner will be eligible for Principal Private Residence (PPR) relief only if he or she was tax resident in the same country as the property for the relevant tax year or, if non-resident, that he or she spent at least 90 midnights in the property, or in other properties in the same country in the tax year. Spouses and civil partners can only have one residence between them and residence by one spouse/civil partner will be deemed to the residence of the other.
Non-residents are able to nominate that a UK property meeting the 90-day rule is their main residence for the tax year of sale.
The rules mean that individuals who are resident in the UK will remain eligible for PPR but non-residents will need to meet the 90- day rule. UK residents who have overseas property will also need to satisfy the 90-day rule even if they have already elected for the second home overseas to be their main residence for PPR.
Individuals who retire abroad but keep their homes in the UK, will be entitled to PPR for the years they were in the UK, but will be subject to the 90-day rule thereafter for each tax year (apart from the last 18 months of ownership).
Gains attributed to periods before 6 April 2015 will not be subject to the new rules. The non-UK resident is able to ‘rebase’ the property to the 6 April 2015 market value or, if more beneficial, can either time-apportion the gain or have the entire gain/loss taken into account.
Should a PPR election have been made in respect of a property but the property no longer qualifies for PPR because the residence and day count tests are not met, it will be necessary for a new election to be made for another property, prior to 5 April 2017, to avoid PPR being wasted.
Example:
Julienne is resident in France and owns a flat in London. In 2016/17 she stayed 80 midnights. Her husband John accompanies her on 30 of those nights. He stayed on for an extra 12 midnights on business.
Julienne passes the 90 ‘midnights test’ because the property has been occupied by one of them for 92 midnights.
If John stays on for only nine extra midnights the test will fail because the property will have been occupied for only 89 midnights.
This is a sample tip taken from our 112 page guide:
Please register or log in to add comments.
There are not comments added