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Last word in property

PUBLISHED: 10:46 13 September 2016 | UPDATED: 10:46 13 September 2016

Norwich Accountancy Services. Jon Hook
PHOTO BY SIMON FINLAY

Norwich Accountancy Services. Jon Hook PHOTO BY SIMON FINLAY

ARCHANT NORFOLK

Tax advice from the legal expert from Norwich Accountancy Services

A financial adviser asked about Principle Private Residence (PPR): “With regard to capital gains tax (CGT) on second homes, our client was of the understanding that if she were to move into a house she had previously been letting out for 18 months that she would receive full CGT relief. I thought the CGT relief for a main residence would only apply to when you’d been living there and you would still be liable for gains in the period the property was being let. ”

When you live in a property you get PPR relief, but exemption is available for the following periods of “deemed occupation”:

• The past 18 months of ownership

• Up to three years absence

• Any period spent working abroad

• Up to four years of absence while working elsewhere in the UK

The last three items must be preceded and followed by a period of actual occupation. Where part of a residential property is used exclusively for commercial purposes, any gain must be apportioned between the part used as a main residence and the part used for a trade, vocation or profession. There have been many cases where people have renovated a house and moved in for a while so they can claim PPR relief. The capital gains regime blocks PPR relief where the owners primary goal is to make money from a property. In reality HMRC would look at other factors in order to identify trading activity of this kind. This can be a tricky area and expert advice should be sought.

Jon Hook at Norwich Accountancy Services, sponsors of this column; 01603 630882, www.norwichaccountancyservices.co.uk

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