Buying two houses

nomunnofun

Pennywise wrote: »

Just remember that if you're going to "flip" your home for PPR relief, you have to nominate one within two years of buying the second. If you don't nominate within the time limit, then HMRC will decide which home is your PPR on the facts and you'll lose the ability to flip them.

So, when you have two, write to HMRC to tell them that you're nominating one to be your PPR. Once done, you can change your nomination to the other property, and vice versa. If you owned both for several years, you could be completely exempt from both if you nominate A to be PPR for first three years, then B for next three years, then back to A for three years, etc. You get PPR for the years each was your home and you also get the 3 extra years, so get the timings right and you have no CGT to pay at all.

This planning opportunity is completely lost if you don't make that first PPR nomination within 2 years of buying the second home.

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm#5

Excellent. However I have formed the impression that the op has no intention of selling either house and CGT has only raised its head due to the mistaken belief that it was payable on death.

CLAPTON

Pennywise wrote: »

Just remember that if you're going to "flip" your home for PPR relief, you have to nominate one within two years of buying the second. If you don't nominate within the time limit, then HMRC will decide which home is your PPR on the facts and you'll lose the ability to flip them.

So, when you have two, write to HMRC to tell them that you're nominating one to be your PPR. Once done, you can change your nomination to the other property, and vice versa. If you owned both for several years, you could be completely exempt from both if you nominate A to be PPR for first three years, then B for next three years, then back to A for three years, etc. You get PPR for the years each was your home and you also get the 3 extra years, so get the timings right and you have no CGT to pay at all.

This planning opportunity is completely lost if you don't make that first PPR nomination within 2 years of buying the second home.

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm#5

I understood that the 36 month 'rule' only applied to the last 36 months of ownership and was not accumulated via 'flipping';

maisie1234

Thank you so much re the tip to register your choice of house within 2 yrs. I guess it will be the most expensive one but I also need to take into account which will rise faster especially as they are likely to be brought for say £450kish each. Think the one in London but we have plenty of time.

The plan at present is to enjoy and live in them both. Our boys are likely to have jobs in London and the SE. My older son loves London. Bet he suggests that he 'looks after it' ie. lives in it especially if the rent is low (!!)

Not keen on that at all. We arent buying a flat for him to live in.....

Pennywise

CLAPTON wrote: »

I understood that the 36 month 'rule' only applied to the last 36 months of ownership and was not accumulated via 'flipping';

Correct, but you're also accruing the exempt years of PPR whilst each is nominated as your PPR, so get the timings of the nominations right and you get exempt years of PPR, final 3 years, and the annual exemption (sell both in different tax years) and you could end up with sizable gains and no CGT to pay.

CLAPTON

Pennywise wrote: »

Correct, but you're also accruing the exempt years of PPR whilst each is nominated as your PPR, so get the timings of the nominations right and you get exempt years of PPR, final 3 years, and the annual exemption (sell both in different tax years) and you could end up with sizable gains and no CGT to pay.

interesting...........

so e.g. if you owned two properties and flipped very 3 years

then after say 24 year each would have accumulated 12 years of PPR exemption
so that's 50% (12/24) of the gain would be exempt for one ... and the other would get 15/24 exemption


if you didn't flip until the last minute
then one would get 100% exemption
and the other 3/24th

if both were equally priced with identical gains then it would make very little difference

maisie1234

And that's the thing. They are likely to be the same price although expect the Kew flat to increase but who knows.

nomunnofun

maisie1234 wrote: »

And that's the thing. They are likely to be the same price although expect the Kew flat to increase but who knows.

And only if you ever sell, of course. If you still own both properties at your passing CGT will never be an issue.

maisie1234

Had a long talk with husband and he is clear that he wants to 'ring fence' some money on his death to only be used if our children are buying a house or using it for education. He wants this in his will!

If he passes before me then the vast majority of the money will be tied up in the two houses. I dont like this idea at all, once I go that might be different but what if I needed money for long time care?

xylophone

once I go that might be different but what if I needed money for long time care?

You would still have your company pension, a state pension and a widow's pension from your late spouse and could sell or rent out the properties?

maisie1234

But what he is suggesting is that his 'share' isnt used for my long term care. So what for example would happen if we had two houses, he died and I decided to sell both and buy something more suitable. Immediately some of the money would be lost and be ring fenced.

The real issue I have with this tbh is that he is demanding that the children spend some of his money on the things he deems acceptable. Sometimes you just have to accept that you need to trust them and that you have brought them up in the right way.