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Principle Private Residence CGT question!

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Hi All

I currently jointly own 2 properties with my brother. We both UK nationals but have both been living overseas for about 10 years and are non resident landlords.

Property A consists of a 4 bedroom house with separate basement flat. The property was bought for 127,000 pounds in 2001.

Property B is a 4 bedroom house.

The Property A basement flat will soon be sold for 50,000 pounds.

I am wondering if any CGT is payable on this property? Can we treat is as our Principle Primary Residence and thus sell it free of any CGT?

Any help would be greatly appreciated.

Thanks

Comments

  • Pennywise
    Pennywise Posts: 13,468 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    skillboy wrote: »
    Can we treat is as our Principle Primary Residence and thus sell it free of any CGT?

    Only if you actually lived in it as your home. If you.ve never lived in it, then no.
  • skillboy
    skillboy Posts: 106 Forumite
    Thanks. Is there any minimum amount of time I need to live in the property for it to be consider a PPR?
  • nomunnofun
    nomunnofun Posts: 841 Forumite
    skillboy wrote: »
    Thanks. Is there any minimum amount of time I need to live in the property for it to be consider a PPR?

    At least six months according to jimmo on this thread:

    https://forums.moneysavingexpert.com/discussion/4513523

    jimmo is an ex tax inspector who specialised in CGT and so I certainly would not be arguing this point, Given your own situation though, I would be looking for a bit longer than that.
  • holly_hobby
    holly_hobby Posts: 5,363 Forumite
    1,000 Posts Combo Breaker
    edited 26 March 2013 at 8:19PM
    If you don't currently live in the property being sold, and have never lived in it prior to disposal - there is no PPR relief or any other relief/allowances - other than your unused CGT annual allowance £10,600 2012/13), together with application of any prev nominated CGT losses, and other permitted deductions (such as improvement/disposal costs).

    If you come back to the UK to re-occupy to avoid CGT, then you would need to live in the property as your sole primary residence. As suggested a 6 mth term pre disposal, could be classed as a reasonable term of occupancy, BUT it is important to note that there is actually no HMRC minimum defined term which would satisfy PPR regs.

    To which HMRC being the tinkers they are, may, if they believe that your occupany is not (and was never) for the longterm, but solely as a tax avoidance exercise, continue to dig and dig, whether 6 mths or even longer may have elapsed between return and sale (to which given your prev UK absence for over a decade, before return to the UK and subsequent sale, may lead them to consider this worthy of a good old rummage and sniff round) !

    To which, HMRC may require proof of primary residence in support of any PPR claim, which may be someway achieved by production of such evicence as utility bills at this address in your name, bank/b society and credit card/loan accounts registered here, voters roll and local Dr registration, etc, and indeed HMRC having you registered at this address for tax (NB - list not exhaustive !).

    I may also, because you have 2 UK properties (and just as an attempt to belt and brace this), contact HMRC on your return, and make formal nomination of property A as your Primary Residence.

    As a note although you have been os of the UK for 10 ys, and may not otherwise be classified as resident/ordinarilly resident (which otherwise would affect liability). As the asset to be disposed, was utilised as/in a trade in the UK (ie it was let), any gain remains CGT exposed, regardless of your own residency status. But, as always, please verify all tax comment directly with HMRC or your tax practioner.

    To which, given the issues to hand, I would as stated, really recommend practitioner advice and guidance on this - to make sure that you get this right whilst mitigating tax where possible (and having some professional protection).

    Hope this helps

    Holly
  • skillboy
    skillboy Posts: 106 Forumite
    All very helpful advice. Many thanks indeed to all.
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