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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My wife and I own a 4 bed property (our main residence

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Hello
My wife and I own a 4 bed property (our main residence in Taunton Somerset). Only residence since June 2012. As I work in London during the week we bought a 2 bed flat in Purley that I live in Monday to Friday, returning to Taunton at weekends.
As far as I can work out currently we're eligible for Principal Private Residence Relief (PPRR) relief on the Taunton House. However, can I 'flip' residency to the Purley flat for a short period of time say 6 months so that when I sell in for example 10 years time we would benefit from the last 18 months exemption rule? (accepting that we would lose 6 months exemption on Taunton House but noting that yearly capital gains tax allowance would cover this very short period especially if this house kept for 10+ years).
It is clear that I live in the flat and have associated utility bills and pay council tax accordingly. I know that an election must be made within 2 years of purchase (flat purchased in May 2014). Currently my wife is not on the Council Tax register for the Purley flat as I claim 25% reduction as she is never there apart from the very occasional weekend. Would I be wise to add her to the Council Tax role for Purley at least for the 6 months I claim that the flat is my Main Residence or does the fact that I am on it, and a couple can only claim one set of PPRR suffice? Any other potential pooh traps to be aware of?
I could of course not bother about making an election but given that the London property has increased in value and is likely to increase in the long term it seems silly not to make the most of the 18 month exemption.
Kind regards
Mark H
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Hello and welcome to the site. Thank you for your question.

Lets see if I have got all the facts...

Flat bought in Purley in May 2014. Being used as personal accommodation during week days. Wish to use the flat as main residence for say 6 months to avail final 18 months additional allowance at the time of sale on the grounds the property was main residence during period of ownership.

You can only use one property as main residence at any one time ( this applies to married couples too). The fact that you are paying reduced council tax on the grounds of single occupancy does not help.

The onus will be on you to demonstrate that the property was used as main residence and that you intended to make the property your main residence for the family when you first moved in, even if subsequent circumstances made you change your mind later.

There is no set minimum period of occupation in order for PPR (principal private residence) to apply. What matters is your intention, you should make it obvious that the property is your main residence by letting your bank, tax office, employer, insurance company, DVLA and other relevant persons know of your change of address. You should also register with local doctors in the area. This would all help as there will be little argument in time to come.

Bear in mind, the last 18 months rule applies to all properties that you have lived in as main residence. So you could avail additional 18 months on both properties over time.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

There is nothing illegal about flipping, i.e. change your principal residence.

Customer: replied 1 year ago.

Thank you; very helpful. Just before I grade you as top grade a quick raincheck.

From what you say I would be wise to make all/most of those changes (Bank, Driving License, car insurance, employer - some of which I have already done at least for me if not wife) etc... ASAP including getting my wife added to the Council Tax bill for Purley and 'flip' for say 6 months immediately thereafter so that if I sell at year 10 point, we would receive 2 years (6 months actual plus 18 months allowance). And of course keep some of that paperwork in case of enquiry, in 10 years time. I probably won't get every little thing changed but as long as I have a goodly number then it helps the case. That way 2/10 of capital gain would be exempt I believe (and of course we have our annual CGT allowance to use too).

No issue with Taunton property as it will be main residence for 20 years plus so losing 6 months protection not an issue really given wife and I will have annual CGT allowance to use.

I take it that I simply write to Inland Revenue letting them know I have made an election regarding Main Residence (PPRR) declaration from a said date, and likewise after 6 months let them know I have changed back again?

Yours

Mark H

Expert:  taxadvisor.uk replied 1 year ago.
Mark thank you for your reply.

[q]
From what you say I would be wise to make all/most of those changes (Bank, Driving License, car insurance, employer - some of which I have already done at least for me if not wife) etc... ASAP including getting my wife added to the Council Tax bill for Purley and 'flip' for say 6 months immediately thereafter so that if I sell at year 10 point, we would receive 2 years (6 months actual plus 18 months allowance). And of course keep some of that paperwork in case of enquiry, in 10 years time. I probably won't get every little thing changed but as long as I have a goodly number then it helps the case. That way 2/10 of capital gain would be exempt I believe (and of course we have our annual CGT allowance to use too).
[a]
Thats correct - If I were you I would stay there for 12 months.. even stronger case to support the argument that the intent was there but did not work out.

[q]
No issue with Taunton property as it will be main residence for 20 years plus so losing 6 months protection not an issue really given wife and I will have annual CGT allowance to use.
[a]
That is not an issue .. you could stay away for up to 18 months and no CGT worries.

[q]
I take it that I simply write to Inland Revenue letting them know I have made an election regarding Main Residence (PPRR) declaration from a said date, and likewise after 6 months let them know I have changed back again?
[a]
Yes.

I hope this is helpful and answers your question.


If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

taxadvisor.uk, Chartered Certified Accountant
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