Private Residents and Letting Relief for jointly owned home
Discussion
Myself and my partner jointly own a home, currently rented out whilst we are abroad. I'm trying to confirm that we won't have to pay any capital gains tax on the eventual sale of the property one day.
Getting this right now, might change our plans in terms of where we live when we return to the UK, or how long we hold onto the house etc. Just after some reassurance I've understood and done the calculations correctly!
We jointly own the home, so would we each receive PRR and letting relief on our share of the gain?
Assume a gain of £160k in total, would that be split to £80k each first. Then take away say 50% as we lived in the house for 50% of the time (lets ignore the 'free 18 months PRR' for now!), resulting taxable gain is £40k. Then subtract the lettings relief, £40k in this example. Thus leaving no taxable gain.
Does that sound correct, or are the allowances for the property itself rather than the individual?
Getting this right now, might change our plans in terms of where we live when we return to the UK, or how long we hold onto the house etc. Just after some reassurance I've understood and done the calculations correctly!
We jointly own the home, so would we each receive PRR and letting relief on our share of the gain?
Assume a gain of £160k in total, would that be split to £80k each first. Then take away say 50% as we lived in the house for 50% of the time (lets ignore the 'free 18 months PRR' for now!), resulting taxable gain is £40k. Then subtract the lettings relief, £40k in this example. Thus leaving no taxable gain.
Does that sound correct, or are the allowances for the property itself rather than the individual?
Can I ask an additional question about PRR :
All the on-line examples are where the person had it as primary residence at the beginning and then rented it out at the end.
My scenario is; house owned as second home for 3 years and then lived in as primary for 1 year (4 years ownership in total). Do I still get 1 year PRR + 18 months?
Thanks.
All the on-line examples are where the person had it as primary residence at the beginning and then rented it out at the end.
My scenario is; house owned as second home for 3 years and then lived in as primary for 1 year (4 years ownership in total). Do I still get 1 year PRR + 18 months?
Thanks.
Yes.
As long as the period being claimed as the period where it was the main residence is genuine.
There have been a few cases where an individual claimed that a home was a main residence but the claim was rejected because the proof that it was a main residence was not good enough. This type of failure to make a successful main residence claim often relates to builders who have bought a property and moved in while they were "doing it up" prior to resale.
As long as the period being claimed as the period where it was the main residence is genuine.
There have been a few cases where an individual claimed that a home was a main residence but the claim was rejected because the proof that it was a main residence was not good enough. This type of failure to make a successful main residence claim often relates to builders who have bought a property and moved in while they were "doing it up" prior to resale.
AnotherGuy said:
Thank you Eric Mc, that's very helpful. In my case it was genuinely my primary residance with matching Council Tax bills and utilities etc to evidence.
Most people have no issue with being able to claim Main Residence exemption (ask any MP 
) but there have been a few individuals who have stretched the concept a little too far.Gassing Station | Finance | Top of Page | What's New | My Stuff