Question on PPR

garrunt

I did some tax exams many many years ago. There was a rule relating to PPR that I recall from then. Can somebody tell me if the same rule applies these days ?

Numbers are made up..

I buy a house in 2007 for £200k, move in and do some renovation.
With renovation complete I have it valued in 2011 at £300k and then move out, but hold it as a buy to let.
I later sell it in 2014 for £300k (so no gain since 2011)

Am I right that provided I can prove the valuation of £300k in 2011 the gain of £100 can be assessed as accruing entriely during the period in which the property was my PPR (2007 to 2011) ?

Or....would the gain be assessed as accruing over the whole period from 2007 to 2014..thus causing some part to be a non PPR period ?

My quesiton is not about the detail of how many years PPR I would have between 2011 and 2014.....just specifically the issue of whether I could use the fact that the gain accrued between 2007 and 2011.

And..what proofr would I need to produce that the property was worht £300 in 2011 ?..a simple surveyors valuation as you would get when remortgaging ?

00ec25

No your memory is wrong,
the gain accrues evenly over the entire period of ownership and the valuation in 2011 is irrevelant for CGT purposes

the fact some of that period was PPR (now called PRR - private residence relief) and some was during a let period means the total gain will be approptioned to these 2 periods based on the length of each period as a % of the total ownership period (measured on months not years)

there are other complications you may also have forgotten - letting relief and the deemed occupancy period being the two main ones in your example

lordbase

In terms of actual tax due in this scenario it will be very little, or in most circumstances nothing. Although bear in mind these figures are based on very rough dates and figures so professional advice should be sought.

Assuming you lived in the property as your PPR 00ec25 is correct and the gain accruing while you occupied it (ie 4/7th) is covered by main residence relief. Where a property is your main residence, the last 3 years of ownership are also covered by main residence relief so this actually covers the next 3/7ths and means that the whole gain is exempt. If the dates don't quite over lap there may well be some gain exposed though.

However, as you let the property you are entitled to lettings relief, which is the lower of:

£40,000
the gain in the letting period
the gain in the PPR period.

In this case I would suggest that this would be the £40,000, which would cover the remaining gain.

This is all on the assumption though that you didn't buy the property to do up and sell, because if that was your intention then you are in fact trading and the gain is all subject to income tax.....

Bottom line - seek professional advice.

Anthony