PROPERTY: Main residence rules change again

Many London based commercial business owners have a second home, whether that be in the capital here or perhaps overseas. Some rent their properties long term or for some it is part of a property portfolio of continual sale and acquisition. Up until recently, there has been the option for homeowners to select which of their homes is their Principal Private Residence (PPR) for which any sale profits are exempt from Capital Gains Tax. (CGT) via PPR tax relief. Because there is a two-year window to notify HMRC from the date when a property became the PPR, the legislation has been open to abuse, with taxpayers “flipping” properties to suit their requirements and avoid paying CGT. It was deemed legitimate but somewhat taking advantage of the system. New rules are coming into place from 6 April 2015 for property gains made after this date. The key purpose of the change in tact is to restrict non-UK residents from making gains on UK properties and not paying tax in the UK.

Non-resident Capital Gains Tax (NRCGT)

NRCGT is a new CGT from 6 April 2015 and applies to non-UK residents with properties in the UK and UK residents with second homes in other countries.

Homes can now be nominated as a PPR if the following applies:

1) The property must be located in the same country as the tax residency for the taxpayer 2) 90 midnights need to be spent in the property within a tax year. This includes nights spent by a spouse or wife, but the days can’t be doubled up.

Nominating your main residence

For UK residents the two-year rule still remains. For non-residents though notification to use a second home as a PPR can take place at the time of sale using HMRC form NRCGT. Anyone with a second home or a property portfolio should have the ongoing support of a professional accountant as rules change regularly and tax breaks can be missed. Figurit are experts in property tax and help many commerical business owners to maximise their position in the property market. T: 020 7376 9333 E: info@lansdellrose.co.uk

For more information

 

    Your Name (required):

    Your Email (required):

    Subject:

    Your Message:

    I would like to receive marketing information about Figurit's Services and updates about legislation changes from time to time (required):

    YESNO

    I would like to sign-up to the Figurit newsletter (required):

    Please view our Privacy Policy

    We will be in contact with you regarding your enquiry