Most people are aware that generally capital gains is not payable on any gain made when selling their main home. This is due to Principal Private Residence Relief (PPR).
There are conditions attached to the above and these are;
- the property mustn’t have been purchased ‘wholly or partly’ for the purposes of making a gain
- be the individuals only or main residence at some point of ownership
- the property is located in the same territory as the individuals ‘tax residence’
The word residence is key and rather conveniently isn’t defined in legislation. In such cases, we are bound by the decisions and interpretations of the Courts to help decipher how the law is to be applied.
Proving a property qualifies for PPR?
When deciding whether a property should be given Principal Private Residence (PPR) status HMRC will look at whether the owner had any intention of living in the property. It is a matter of fact whether a property is the PPR or not but to allow a PPR claim HMRC will require proof that the property has actually been lived in as the PPR. As well as there being an ‘intention’ to occupy there must be a ‘degree of permanence or continuity, or some expectation of continuity’ in order for PPR relief to be allowed. There is no minimum period of occupation that required before the property can amount to a residence as each case is based on its own facts. However, actions such as registering the new PPR address with the local doctor, on the electoral role, local council, bank etc. promptly on moving in would be good evidence that the move had the intention to be long term.