Reducing CGT with Principal Private Residence Relief

If you're looking to reduce your capital gains tax charge on the disposal of UK or overseas property, claiming principal private residence ('PPR') relief can significantly reduce your tax bill.

The rules applying to PPR relief aren't straightforward but we have a number of books and articles that will clearly explain when you can and can't claim this relief. A common area of confusion arises in the application of the principal private residence relief election. Many people think this applies when you own two properties and allows you to avoid choose which property will attract PPR relief.

This is not strictly the case. In order to qualify for the election a property needs to be your residence - not simply a property that you own. 'Residence' implies that there must be some degree of occupation by you. Therefore a property that was let, and never occupied by you couldn't qualify as a residence for this purpose. There are though other options that could be considered.

Interactive PPR Relief Tool PPR Relief Calculator Calculating the amount of PPR relief can be difficult. This calculator does all the work for you. Just enter details of your periods of ownership and occupation of the property and our PPR relief calculator lets you know the amount of PPR relief you will qualify for. . . . keep reading Interactive Private Residence Relief Tool Qualifying for Principal Private Residence ("PPR") Relief can substantially reduce capital gains tax on the disposal of property or land. This interactive tool guides you through the rules relating to PPR relief to ensure you maximise your relief. Available for Gold Members Only. . . . keep reading

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Principal Private Residence Relief Buying property tax efficiently whilst your children are studying 07/12/2011 The slump in property prices will have made many people consider whether buying property for their children to occupy whilst at university is cost effective. However, given the currently low prices, if you're looking at the long term with perhaps other family members occupying the property and also renting it out to third parties it can still be a worthwhile investment. In this article we look at structuring such a purchase tax efficiently . . . keep reading Extending the nomination period for PPR relief with ESC D21 - USERNAME: charliebrown Tax Question: Hi, just as a follow up to the PPR question for a non-dom client, thank you for your answer. I agree that the fact that they are resident in the UK for tax purposes makes it doubtful whether they could ever successfully argue by way of fact that the Spanish property was their main residence. I am therefore more inclined to think that they should make an election such that they can choose which property is treated as the main residence for UK capital gains tax purposes, and it would seem that ESC D21 would apply in this case on the basis that the taxpayer was not aware that an election needed to be made (as the UK property is only rented) and that the value of their interest in the UK property is negligible (on the basis that it is just rented). Would this seem appropriate? Many thanks. . . . keep reading PPR relief on overseas property - USERNAME: charliebrown Tax Question: A non-dom client sold their Spanish property last year. In the process of computing the capital gain (which included a rather large forex gain due to the movement in exchange rates), the client has asked me to treat the Spanish property as their PPR. The client (of Spanish origin) is resident but non-domiciled in the UK for tax purposes, and rents a property in the UK which he uses as a base between "travelling" and spending time in Spain with family. When in Spain he resides in his Spanish house which is never let out and maintained for his sole use. The client is currently submitting tax returns on an arising basis. So he doesn't own the UK flat but from my understanding of HMRC guidance it would appear that he has an interest in the flat as a tenant, and therefore unless an election is made HMRC could treat the UK flat as his PPR with the result that PPR relief cannot be claimed on the Spanish house. Should therefore a late election under ESC/D21 be made (the Spanish property was bought over 6 years ago)? Many thanks for your help. . . . keep reading PPR relief on a flat - USERNAME: ellinor Tax Question: I own my own home. When I sell it I know I won't have to pay capital gains tax. I also own an apartment, and have for many years, which I have let out for most (but not all) of that time. Can I get the private residence exemption on the apartment if I sell my house and move into the apartment as my main home, living there for many years (say 5+) before I sell it? Many thanks . . . keep reading Interactive Private Residence Relief Tool 31/08/2011 Qualifying for Principal Private Residence ("PPR") Relief can substantially reduce capital gains tax on the disposal of property or land. This interactive tool guides you through the rules relating to PPR relief to ensure you maximise your relief. Available for Gold Members Only. . . . keep reading PPR & Lettings relief on transfer of property between spouses Tax Question: I am considering selling a flat which I purchased in 1998, the sale of which will generate a gain of circa £150k. Until mid-2010 I had let the property out but last August my wife and I moved into the property as our main residence and I wrote to HMRC to vary my PPR election, although they did not respond. We occupied the flat for 5 days a week, and returned to our house (previously elected as my main residence) at weekends. We lived in the flat from August 2010 until April 2011 and in May 2011 I again let it out for 6 months. While we were living in the flat I tranferred the ownership into joint names and remortgaged it in joint names. For CGT purposes, given that ownership was transferred while we were in occupation, will my wife's period of ownership begin on the day I purchased the flat so that 50% of the gain is hers? Will we both be entitled to 3 years PPR relief? Will we both be able to claim £40,000 letting relief i.e £80,000 in total or will the £40k be split with each of us qualifying for £20k relief? Many thanks. . . . keep reading Helping your children to buy their first property tax efficiently 01/08/2011 For a variety of reasons many adult children aren't able to get on the property ladder without some financial help from their parents. If you're considering ways to help your children buy their first home it's important that you consider the tax implications both for you and your children. In this article we look at ways to help your children purchase their first property tax efficiently . . . keep reading Offsetting losses on a main residence and maximising tax relief 29/07/2011 With the substantial drop in property prices, and with some areas not forecast to return to 2007 price levels until 2018 many people may be selling properties at a loss. Making full use of that loss will be crucial, particularly given the current low property levels also present many opportunities for investors to realise large capital gains. In this article we look at capital losses on property disposals. In particular how this is affected if you've previously occupied the property and how to maximise tax relief. . . . keep reading More

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We can provide you with help on the application of the principal private residence relief rules via our online Capital gains tax help service.

Tax Articles on Principal Private Residence Relief