Chapter 21 - Principal private residence

Question 1

What is a principal private residence?

Goodwin v Curtis (1998)

Answer 1

A dwelling which is a taxpayers only or main residence is known as that taxpayers principal private residence (PPR)
This is not chargeable for CGT purposes. Taxpayer must occupy the residence. Residence implies degree of permanency.
Goodwin v Curtis (1998) - property occupied for 32 days did not qualify

Question 2

Points relevant to complex cases of PPR: 5

Answer 2

1. A taxpayer may only have 1 PPR at any given time
2. A taxpayer who owns and lives in 2 or more properties may make an election as to which is regarded as the PPR. Election must be made within two years after the date from which it takes effect.
3. Married couple may only have 1 between them
4. PPR covers the residence itself together with grounds or gardens up to hold a hectare (5000sqm). Larger areas may be included in exception if they are warranted by size of residence.
5. Actual property rule is related if the taxpayer is required to live in job-related accommodation.

Question 3

Partial exemption

Answer 3

If a property has been occupied as a PPR for only a part of the period of ownership only part of the gain realised on disposal will be except from CGT.

1. 31 March 1982 rebasing rules apply. Period of ownership prior to this date is ignored.
2. If property belongs to taxpayer for some time, last 18 months always count as period of residence so as to help movers.

Question 4

Deemed residence rules: 2

Answer 4

Can include periods whereby the taxpayer was not resident:

1. there is a period of actual residence both at some time before the period of absence and at some time after the period of absence.
2. the taxpayer claims no other property to be a PPR during the period of absence.

Question 5

What are the periods of deemed residence:3

Answer 5

1. any periods of absence during which the taper is working in an employment, all the duties of which are performed outside the UK (or with spouse in such a position)
2. a total of up to four years of absence during which the taxpayer is prevented from living in the PPR because he or she is employed elsewhere in the UK (with with spouse etc)
3. a total of up to three years absence for any reason