CGT on newbuild

00ec25

clock24 wrote: »

This is interesting.

So, if I designate my new-build house as my PPR and sell it, I would now have just one house. This must now be my PPR again (as it's the only house I have). Can that then be sold as PPR, so avoiding CGT again?

In effect both houses have been sold free of CGT! Cannot be correct as this would be an 'open door' for regular small builders.

(Personally I have neither the means, nor the will, to do another new-build but find the tax implications interesting).

basically for the period in which you are NOT claiming PPR in the NON PPR house, you will incur a CGT liability for that time, when you sell the PPR and move back into the non PPR, then obviously it reverts to being a PPR (:rolleyes:) as you state. so you will have a time apportioned period of ownership, some of it as PPR fully exempt, some of it as a non PPR fully liable. This is quite common for people who own second houses eg at the seaside, then move into them at a later date (eg retirement) and then my have to sell them when going into a care home, resulting in a potential CGT liability

Strictly speaking if you then sell the property soon after moving back in, the last 3 years of ownership disregard will mitigate the CGT liability, the HRMC guidance is here , quoting extracts of this: "The purpose of the final period exemption is to help the owner occupier who puts his or her house up for sale but cannot find a buyer...... Although the final period exemption is intended to apply where there are difficulties finding a buyer, it applies ‘in any event’, TCGA92/S 223 (2). So exemption will always be available for the final period if the dwelling house has been its owners only or main residence, regardless of the use of the dwelling house in that final period. But see CG64985 for the definition of the final period particularly in relation to disposals on or after 10 December 2003."


but see next paragraph for the obvious caveat!

a builder could not do this because HMRC would classify his activity as trading and therefore selling the property will incur Income Tax not CGT. The trading rule will also apply to anyone who frequently buys houses to for example redevelop and then quickly sells them on, you do not have to be a full blown registered builder to be classed as a trader