PROPERTY: Changes to the “flipping” rules on PRR again
As a brief recap, Private Residence Relief (PRR) is available when a person’s main residence is sold and a financial gain made. It effectively makes the profit on the sale exempt from Capital Gains Tax (CGT).
on Private Residence Relief
For “second home” owners it has been possible to select which of their properties was their main residence yet the rules were relaxed enough for the properties to be “flipped” in and out of being valid for CGT relief accordingly.
From April 2015, further criteria will be introduced to avoid “flipping”.
The key objective with this is to prevent non-residents making gains on UK properties whilst not paying tax within the UK and, to ensure UK residents are towing the line and not taking advantage of the system.
New CGT on residential property owned by non-residents (NRCGT)
From 6 April 2015 the new NRCGT will be introduced for gains made on or after 6 April 2015.
A home can be nominated as main residence for CGT purposes, subject to the following:
The taxpayer is resident for tax in the same country that the property is located
Within the tax year, the tax payer spends 90 midnights in the property. Their spouse or civil partner can count towards these 90 days but days can’t be counted twice
These rules apply to non-UK residents who own properties in the UK and UK residents who own second homes overseas as well.
Nomination of a main residence
At present, homeowners need to notify HMRC within two years of beginning to use a second property as a main residence for CGT. This continues.
Non-residents however, can notify HMRC at the time of a sale, using form NRCGT.
Many more rules apply and it is best to have the support of an accountant if you own two or more properties, as CGT can be a complex tax to unravel. Figurit are experts in property tax issues as well as specialist accountants for dentists and medical consultants.
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