Hello and welcome to Just Answer. My name is ***** ***** I'm happy to help with your question today.
Private Residence Relief applies to the main home. So you will be able to apply the relief to your property. However if you sell or dispose of a second property that does not qualify for Private Residence Relief and you must work out the gain or loss and then calculate whether CGT is payable.
In short, PRR will not apply to a second property that you own and CGT might be payable depending on the calculation of gain or loss in value and any other reliefs that may be available.
One property is my private residence, the other my friends
Sorry. Maybe I misunderstood. Do you jointly own the other property?
Yes.We jointly own both
OK. So on your house you will not be liable for CGT. But you might have to pay CGT on the second property. Likewise your friend will not be liable for CGT on the main house but maybe liable on the second.
Basically PRR will apply to your main house. But you may be liable for CGT on the profit that you make on your share of the second house. The same applies to your friend.
Even though my permanent address is in one property and hers is in the other?
Why do you think that makes a difference?
The house that you live in - your main residence - you will be able to claim PRR. But the second house that you have a share in you might have to pay CGT on the profit (increase in value).
If you own two properties you will almost always be liable for CGT on the second property.
Even though we live in both properties seperately and have them as our permanent address?
Yes. CGT is payable on any profit that you make in a second property. So it doesnt matter that your friend lives there. If your name is ***** ***** second property then when you sell CGT will be payable on your share of the profit/equity.
Here is some guidance from HMRC - http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm#1
You will see that CGT is not payable on your main home. The house where you live. But where you have a share in a second property which is not your main home, CGT may be payable on any profit that you make.