More than one home? – Have You Considered Principle Private Residence Relief
Capital gains tax is not typically a consideration when selling your own home if it is your only home and main residence and has exclusively been used as a home. This is due to a tax relief known as Principle Private Residence (PPR).
However, if you own more than one home, for example if you live in one property during the week and another at weekends, then PPR can be a valuable tax relief. If you are in this position then you can elect which property is to be your PPR and this can produce significant tax savings on the eventual disposal of the properties, if proper tax planning is undertaken.
This election must be made within two years of acquiring the second property and in the absence of such an election HMRC will decide the PPR based on facts.
Another consideration, if you have occupied a home as a PPR and have let it for residential purposes, is lettings relief; which can also be used to produce tax savings.
Additionally, it is important to consider which periods of ownership qualify for PPR relief, for example, as long as the property has been your only or main home at some point during the time in which you have owned it, the final three years of ownership will be deemed occupancy. There are other examples which will count towards occupancy.
In order to minimise future capital gains tax it is important to consider a PPR election and plan effectively. For further information, please contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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