Last word in property

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

Norwich Accountancy Services. Jon Hook

Norwich Accountancy Services. Jon Hook PHOTO BY SIMON FINLAY


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,

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