The CGT consequences of buying a 'space in a tower'

  • Explain how Principal Private Residence relief works
  • Describe what happened in the case of Mr Higgins
  • Describe how PPR flipping works
  • Explain how Principal Private Residence relief works
  • Describe what happened in the case of Mr Higgins
  • Describe how PPR flipping works
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CPD
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The CGT consequences of buying a 'space in a tower'

Miss Doolittle cannot claim two main residence reliefs, but she can within two years of the start of a period of ownership of two residences choose which is to be treated as her main residence under section 222(5) TCGA.

She may also swap between them and continue to do so as other residences are owned and brought into the mix and this can be an effective strategy to maximise the exemption.

On 11 July 2019 HMRC published a policy document Changes to ancillary reliefs in Capital Gains Tax Private Residence Relief which included draft legislation for inclusion in a Finance Bill 2019-20.

The changes which were to apply to disposals made on or after 6 April 2020 included the reduction in the final period exemption at the end of ownership from 18 months to nine months except for owners who move into a care home or who are disabled where the 36 month period of PPR exemption would have still applied, and the legislation of ESC D49

The Chartered Institute of Taxation (CIOT) and others have called on HMRC to review the aims and use of PPR before the planned cut to the final exemption period.  

In some ways, the influence that the language of the PPR rules might have on our constructing a mental image of a Miss Doolittle may take us back to thoughts of Alice faced with mastering the language of Humpty Dumpty.

The Finance Bill was never laid before Parliament. It will be interesting to see how the next administration puts these proposals back together again.

William Hancock is a partner in the tax and estate planning team at Collyer Bristow

 

 

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CPD
Approx.30min
Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.
  1. Why are off plan purchases popular right now?
  2. Why did HMRC decide that the gain on the sale of the apartment was only partially applicable?
  3. How is a period of ownership of a dwelling usually determined?
  4. Principal Property Relief applies when the property has been the owner's main residence throughout the period of ownership, true or false?
  5. What is PPR flipping?
  6. CGT was applicable in Mr Higgins case, because the ownership of the property started from the time he completed the purchase. True or false?
  7. To bank your CPD you must sign in or Register.