Private residence relief
Discussion
Hi
Would I be eligible for PRR if I were to sell?
We have owned the house for 22 years and lived in it for the first 5 years. It has been rented out for the last 17 years. Would I get 5 years plus 9 months relief?
We own our main home.
Thanks
Would I be eligible for PRR if I were to sell?
We have owned the house for 22 years and lived in it for the first 5 years. It has been rented out for the last 17 years. Would I get 5 years plus 9 months relief?
We own our main home.
Thanks
Edited by Wilfryd on Wednesday 19th July 18:50
Things might have changed in the last 5 years but my brother and his wife sold a BTL they jointly owned for about 20 years. On the relevant forms they said it was her PPR at time of sale avoiding CGT on a gain of about £50k. I never heard they got hit with a CGT bill.
I was surprised by this as for the time they owned the BTL it was rented to a housing benefit claimant. You'd have thought HMRC would link up with DWP to just check.
I was surprised by this as for the time they owned the BTL it was rented to a housing benefit claimant. You'd have thought HMRC would link up with DWP to just check.
uknick said:
Things might have changed in the last 5 years but my brother and his wife sold a BTL they jointly owned for about 20 years. On the relevant forms they said it was her PPR at time of sale avoiding CGT on a gain of about £50k. I never heard they got hit with a CGT bill.
I was surprised by this as for the time they owned the BTL it was rented to a housing benefit claimant. You'd have thought HMRC would link up with DWP to just check.
You can AIUI, designate a house as your principal residence despite it being rented out, however that may come at the cost of paying CGT on the home you actually live in when it's time to sell. I was surprised by this as for the time they owned the BTL it was rented to a housing benefit claimant. You'd have thought HMRC would link up with DWP to just check.
Since most people's BTLs are worth less than their main homes, it's normal to get relief on the home you actually live in, but it's not necessarily so.
The actual tax manuals are online somewhere....
It was never their primary residence, nor did they do any election. It was very blatant evasion of tax as they deliberately avoided having to pay it as they lied about the residence status.
Ignorance was no defence as my brother asked me, an accountant at the time, what the CGT implications were. I told him what he needed to do to make the declarations correctly and roughly how much CGT would be due.
Ignorance was no defence as my brother asked me, an accountant at the time, what the CGT implications were. I told him what he needed to do to make the declarations correctly and roughly how much CGT would be due.
OutInTheShed said:
You can AIUI, designate a house as your principal residence despite it being rented out, however that may come at the cost of paying CGT on the home you actually live in when it's time to sell.
Since most people's BTLs are worth less than their main homes, it's normal to get relief on the home you actually live in, but it's not necessarily so.
The actual tax manuals are online somewhere....
You can’t elect a house as your PR if it’s let. Since most people's BTLs are worth less than their main homes, it's normal to get relief on the home you actually live in, but it's not necessarily so.
The actual tax manuals are online somewhere....
Eric Mc said:
They may not be in the clear yet. HMRC has a Let Property Unit which tries to tie up property sales with letting income and property disposals making use of Land Registry details.
Did your brother return his rental income properly to HMRC under self assessment?
This was well over 5 years ago so I doubt HMRC will be taking any action, but you never know.Did your brother return his rental income properly to HMRC under self assessment?
He never did a SA for the rent over the time they rented it out. For the ten years or so they owned the property it was rented to his mother in law and she paid the rent with her housing benefit for the whole time. He once told me the rent received was about equal to the interest they were paying on the interest only mortgage they had on the property. I don't know the actual rental income but, based on housing benefit levels it could well have been below the de minimis required for self assessment returns.
Eric Mc said:
What de minimis level do you refer to?
https://www.gov.uk/renting-out-a-property/paying-taxFrom the HMRC guidance.
"Property you personally own
The first £1,000 of your income from property rental is tax-free. This is your ‘property allowance’.
Contact HM Revenue and Customs (HMRC) if your income from property rental is between £1,000 and £2,500 a year.
You must report it on a Self Assessment tax return if it’s:
£2,500 to £9,999 after allowable expenses
£10,000 or more before allowable expenses"
Assuming the income before expenses was over £2,500 and below £10,000 he didn't seem to need to do anything. Or, is that yet another badly written piece of HMRC guidance?
If you have profits from renting a property, you are supposed to pay tax on those profits.
The £10,000 threshold you are quoting relates to whether you report it to HMRC on a Self Assessment tax return. You still have to report the rental profit if the profit exceeds the £1,000 "Property Income Allowance".
The only exemption from reporting rents relate to the "Rent a Room " scheme which relates to a lodger living in the main residence i.e. not a buy to let.
The £10,000 threshold you are quoting relates to whether you report it to HMRC on a Self Assessment tax return. You still have to report the rental profit if the profit exceeds the £1,000 "Property Income Allowance".
The only exemption from reporting rents relate to the "Rent a Room " scheme which relates to a lodger living in the main residence i.e. not a buy to let.
Eric Mc said:
If you have profits from renting a property, you are supposed to pay tax on those profits.
The £10,000 threshold you are quoting relates to whether you report it to HMRC on a Self Assessment tax return. You still have to report the rental profit if the profit exceeds the £1,000 "Property Income Allowance".
The only exemption from reporting rents relate to the "Rent a Room " scheme which relates to a lodger living in the main residence i.e. not a buy to let.
I agree with all that. But according to him he never had any profits and his income was between the thresholds I stated so he didn't have to do a self assessment return.The £10,000 threshold you are quoting relates to whether you report it to HMRC on a Self Assessment tax return. You still have to report the rental profit if the profit exceeds the £1,000 "Property Income Allowance".
The only exemption from reporting rents relate to the "Rent a Room " scheme which relates to a lodger living in the main residence i.e. not a buy to let.
Was he telling me the truth about the income and profits? More than likely not, as he is about as trustworthy as certain orange presidents and scruffy haired prime ministers. Don't forget we got onto this when I mentioned he lied about the status of the BTL when he sold it.
Sorry to jump on this thread with a different but related question, I have owned my flat (main residence) for many years and the only time I've not lived in it (rented it) is when I've been working overseas, how I read the HMRC wording on this that I can claim PRR for time where I was working outside the UK for any period, is this interpretation correct?
So in essence, owned the property for 10 years, 5 of which I was working outside of the UK therefore I am not liable for CGT or I am wishful thinking?
To slightly complicate matters I do own a BTL which hasn't been my main residence.
So in essence, owned the property for 10 years, 5 of which I was working outside of the UK therefore I am not liable for CGT or I am wishful thinking?
To slightly complicate matters I do own a BTL which hasn't been my main residence.
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