Naming property as main residence?

[UKSBD]

This is personal rather than business.

I own 2 properties.

Property A: have owned for 20 years, was always main residence.

Property B: owned for nearly 2 years, currently main residence.

I seem to remember when buying property B that I had to inform HMRC which was my main residence for tax purposes within 2 years of buying it, is that correct?

If so, how do I report it as main residence, which forms are required (if any)?

 

[john1989]

Are you currently occupying both properties?

 

[UKSBD]

Are you current occupying both properties?

Sort off!

I spent about 12 months doing up Property B whilst still living in A.

Then after moving in to B spent 8 months doing up Property A.

Currently living in B but A is now completely finished too and partially furnished.

Current plan is to let A out in the spring.

 

[UK Contractor Accountant]

The main residence rules are currently under going a review by hmrc and look likely to be overhauld shortly.

The election looks likely to be removed from April 15 and main residenice will be determined based on the facts.

So make the election sooner rather than later!

 

[john1989]

Agreed.

But an election can only be made if both properties are available to be the individuals main residence.

 

[UK Contractor Accountant]

They are both available?

Make the election based on the one with the highest capital gain.

 

[john1989]

Apologies - I read it as the property is being renovated with the intention to be let out upon completion.

 

[UKSBD]

They are both available?

Make the election based on the one with the highest capital gain.

Yes, but where?
I know which one I am electing, but can't find where you do it?
Is there a specific section on HMRC website, or specific forms to get?

 

[UK Contractor Accountant]

Just do it on writing to your hmrc office. You should be able to find a template for this.

I don't think there is a special form to use.

 

[Bob]

Do you still have to time apportion the gain on disposal?
eg
Cost 2012 £100K
Value 2015 £500K
Sold 2022 £700K

Gain whilst owned £600K
Gain whilst let £200K
Last 12 months deemed PPR

Taxable gain 6/10 x £600K = £360K less letting relief

Clearly just hypothetical figures but I think that HMRC have now changed the rules to stop you crystallizing the gain at date it ceased being PPR

Is this right as principle would actually relate to my daughter's house as well

 

[UK Contractor Accountant]

Yes, but where?
I know which one I am electing, but can't find where you do it?
Is there a specific section on HMRC website, or specific forms to get?

Please accept this letter as an election to nominate ………………..(insert address of property) as my [our] main residence for the purpose of principal private residence relief from Capital Gains Tax in accordance with s.222(5) of the Taxation of Chargeable Gains Act 1992.

This election is effective from ……………….. (insert date from which it is to apply - this can be up to two years prior to the date of this letter). This election supersedes or varies any election I [we] have previously made.

 

[Philip Hoyle]

Doesn't matter what the value was when you moved out and started to let it. Gain is based only on purchase and sale values, the difference being time apportioned according to how long it was deemed to be your PPR and then lettings relief follows that.

 

[john1989]

Also I don't think you won't get HMRC to agree the election, they'll just acknowledge it.

 

[UKSBD]

On further reading, if you don't nominate one they just make it your main residence anyway, the only reason to nominate appears to be if it's a bit of a grey area between the 2 and you specifically want one nominated for tax advantages.

As I wasn't really going to nominate for this reason

Please accept this letter as an election to nominate ………………..(insert address of property) as my [our] main residence for the purpose of principal private residence relief from Capital Gains Tax in accordance with s.222(5) of the Taxation of Chargeable Gains Act 1992.

This election is effective from ……………….. (insert date from which it is to apply - this can be up to two years prior to the date of this letter). This election supersedes or varies any election I [we] have previously made.

Thanks.

Can I choose the date?

I moved in to property B in December 2013 and then did Property A up throughout 2014.

As I assume it would make more sense to have Property A still as my main residence after work was completed, can I use a date of December 2014 as the date I nominate Property B as main residence?

 

[Bob]

Thanks @Philip Hoyle That was what I thought. Just wanted to make sure that they hadn't changed the rules. Will have to get my daughter and her family to move back in when they get back from working abroad as they live in Central London and there is a BIG gain

 

[UKSBD]

Doesn't matter what the value was when you moved out and started to let it. Gain is based only on purchase and sale values, the difference being time apportioned according to how long it was deemed to be your PPR and then lettings relief follows that.

How do they work out the figures, do they just estimate what the value of the property was on the day you stop classing it as your main residence?

Edit: sorry, missread you bit about value when moved out irrelevant

 

[UKSBD]

Gain is based only on purchase and sale values, the difference being time apportioned according to how long it was deemed to be your PPR and then lettings relief follows that.

So if I own it for 20 years as main residence, let it out for next 20 years (not main residence)
I get 50% reduction on the eventual capital gain?

Edit: and the capital gain is the difference from day I bought to day I sold?
(less whatever calculations they use for expenses etc.)

 

[Bob]

Less: letting relief

 

[UKSBD]

Less: letting relief

And last 3 years from reading that.

 

[UKSBD]

One more question.

If you elect a property as main residence for tax purposes is this also taken in to consideration for Council tax purposes.

These are facts in my case.
Paying full Council Tax on Property A (main residence for 20 years)

Bought Property B in Jan 2013, received council tax allowance up to June 2013 then paying full (our councils policy is only 6 month allowance allowed)

Moved out of Property A in December 2013, started claiming allowance from Jan 2014 as it was uninhabitable (took roof off and removed kitchen and bathroom)

As I started claiming Council tax allowance on Property A in Jan 2014, should that be the date I say Property B became main residence?

 

[Bob]

36 months reduced to 18 months (I thought it was 12 )

 

[UK Contractor Accountant]

36 months reduced to 18 months (I thought it was 12 )

that's on the cards for next year I suspect.

 

[UKSBD]

Just do it on writing to your hmrc office. You should be able to find a template for this.

I don't think there is a special form to use.

Boy have they made these simple 2 minute jobs a pain

Our local Office closed last year and finding the right contact point on GOV.UK website is like finding a needle in a haystack.

Would this be most appropriate contact point? - https://www.gov.uk/government/organ...s-for-individuals-employees-and-self-employed

 

[UKSBD]

36 months reduced to 18 months (I thought it was 12 )

I think I'll just keep it until I die and let the kids sort it out

 

[UKSBD]

What an absolute fiasco.

Phone helpline, hear a scrip for 5 minutes totally unrelated to my question, eventually go through to advisor - wrong department.

Transferred elsewhere - on hold.
They ask is it just change of address reporting, I say no it's a letter about electing a property as main residence, they seem to assume this is same thing.

Say um and are and say they can do change of address over the phone.

Ask for NI number or UTR (which I don't have to hand)

They say I can write instead and give me the address.

The address of where to send the letter to was all I P***ING wanted in the 1st place without going through all that b****cks

Time for a cup of tea.