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Dear Sir/Madam, I am currently living at home with my parents

Resolved Question:

Dear Sir/Madam,

I am currently living at home with my parents having never owned a property or obtained a mortgage before. I am now looking to move out and buy a new property for myself with a First Time Buyers mortgage.

If I were to move in and then later decide, say after 6 months, that I would like to back with my parents but would still like to keep the property then I will obtain a consent to let from the Bank/Building society. At this point, if the consent is agreed, would I be eligible for Principle Private Residence and Private Letting Relief?

If the bank/building society refuses the consent to let and instead request for a transfer to a Buy To Let Mortgage would I still be eligible for PPR and PLR to reduce/eliminate Capital Gains Tax in future even though it's on a BTL mortgage but I have lived in property for 6 months?

What is the minimum of time that I will have to live in the property to gain PPR? What proof do I need to show that I have lived in the property?


Many Thanks,
Lawrence
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

To qualify for private residence relief, you have to have lived in the property for any period of time, and its not so much the length of the time that you live there (although this does have a little bearing, say if you move din for just one week!) but about the quality of the time that you lived there.
So - its important that you move all aspects of your life there, and inform everyone of this being your new address (so work, dentist, doctors, HMRC, National Insurance Office, banks and building societies, DVLA etc ) and that all your personal possessions move in with you.
And of course full use of utilities (so gas/elec water rates council tax, mobile phone/landline phone, TV licence and electoral roll)

Then if you decided to move out, as things currently stand, you then have 36 further months (this is due to reduce to 18 months from 06/04/2014) on which private residence relief is awarded, so in essence if you sold April 2024 having moved out in April 2015, then you can see that only 18 months of this 9 years would attract private residence relief. (and any move back into the property again would be added onto the exempt element already accrued)

However if on moving out you then let out the property, then assuming all rents have been declared to HMRC, then you also qualify for private lettings relief, this can allow up to a further £40,000 exemption on any gain.

So you have to prove that ALL aspects of your life were changed to this new address - (so keep all bills, correspondence of an official nature etc)

Finally even if the mortgage company insist on a buy to let mortgage, this will not later the fact that you have accrued allowable private residence relief, which subsequently will entitle you to private lettings relief.


Thanks

Sam
Customer: replied 3 years ago.

Hi Sam,


 


Thanks for the answer.


 


"Finally even if the mortgage company insist on a buy to let mortgage, this will not later the fact that you have accrued allowable private residence relief, which subsequently will entitle you to private lettings relief."


 


Just to clarify on the last point - does it mean it should not matter if it's on a Buy To Let mortgage and that I would still b entitled to PLR?


 


Regards,


Lawrence

Expert:  Sam replied 3 years ago.
Hi Lawrence

Thanks for your response

No, this means if the mortgage company insist that you have to change to a BTL mortgage that you will not lose the PPR and PLR - but initially you would have to get a mainstream mortgage - as this is after all meant to be a main residence purchase.

Thanks

Sam

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