Reply to: Sole or Principal residence

[SandyD]

To throw something else into this...

If you are serious about living in both properties at the same time and renting out a room in the second, you could leave your PPR election at the second home (so that it is seen as your main residence) and then claim rent a room relief, this would mean that the first £4,250 per year would not be subject to income tax.

Hope this helps!
Craig

Thanks, I am going to be renting rooms in both properties actually, can't see why I'd leave rooms empty when they can generate a bit of money. However the type of rental contract I have with the tenants differs, in the main/principal residence, as I am able to have a lodger license agreement for my main residence, but am told for the second property renting a room means having a AST tenancy agreement.

[Craig at Nixon Williams]

To throw something else into this...

If you are serious about living in both properties at the same time and renting out a room in the second, you could leave your PPR election at the second home (so that it is seen as your main residence) and then claim rent a room relief, this would mean that the first £4,250 per year would not be subject to income tax.

Hope this helps!
Craig

[SandyD]

On the CGT front, there are a couple exemptions/reliefs that you might benefit from when you come to sell the properties.

Any period of ownership where the property was your primary residence will be exempt from CGT, this is based on the portion of time which it was your primary residence compared to the total amount of time that you held the property. If you have more than one property then an election should be made to HMRC within 2 years to tell them which of the properties should be considered your primary residence. There are also some circumstances where you have not actually lived in a property that HMRC will treat as a deemed period of occupation for PPR purposes.

If you have let out a property which was once your main residence (as it sounds like you have) then you may also be entitled to claim letting relief against the CGT due upon the sale of the property.

Finally there is your normal annual exempt amount (currently £10,600) on which you iwll not pay CGT.

Hope this helps!
Craig

Excellent Craig.. this is exactly the answers I was after.

Thanks very much

[SandyD]

Thanks NLUK, I am already doing that, i.e. moved to property 2 registered with the council had all my addresses changed to the new address etc, all above board.

However, I am asking for the future when I want to move back into my first property, I guess I will do the same thing over and move all the addresses to the first property. If I stay occasionally in the second property, then that shouldn't be an issue I believe.

[northernladuk]

You didn't. I'm trying to guess what your question is to do with, because I suspect that the answer will depend on that (i.e. there is no single universal well-defined notion of "main home").

What do you mean, "sole or principal residence"? In what context?

I think she talking from a purely personal point of view regarding being registered with the council for voting and claiming discount on council tax for either sole occupancy or being empty (neither of which apply from what she says) and which one you claim as your main residence when you come to sell the property as she will need to pay CG on any profit.

The fact she is living partly in both makes the CG particularly difficult and if not careful could end up having to argue why she shouldn't pay a percentage of both.

Make one your main residence, register with council for voting, have all your post delivered there and stick with it. The other is a investment property or second home. Before you start asking what the council/HMRC will say you need to get it straight in your head first. It has to be a main property/second one. Forget this 50/50 or whatever, you will make life incredibly hard for yourself. Get it right in your head which you want you main home to be and work around that. Flipping them is going to get pretty complicated with who you are registered with etc, let alone having all you rpost redirected and the like.

[Craig at Nixon Williams]

On the CGT front, there are a couple exemptions/reliefs that you might benefit from when you come to sell the properties.

Any period of ownership where the property was your primary residence will be exempt from CGT, this is based on the portion of time which it was your primary residence compared to the total amount of time that you held the property. If you have more than one property then an election should be made to HMRC within 2 years to tell them which of the properties should be considered your primary residence. There are also some circumstances where you have not actually lived in a property that HMRC will treat as a deemed period of occupation for PPR purposes.

If you have let out a property which was once your main residence (as it sounds like you have) then you may also be entitled to claim letting relief against the CGT due upon the sale of the property.

Finally there is your normal annual exempt amount (currently £10,600) on which you iwll not pay CGT.

Hope this helps!
Craig

[Ignis Fatuus]

Where did I ask about the mileage claims etc... my question has nothing to do with that !!

You didn't. I'm trying to guess what your question is to do with, because I suspect that the answer will depend on that (i.e. there is no single universal well-defined notion of "main home").

What do you mean, "sole or principal residence"? In what context?

[SandyD]

No, thanks, been looking up why councils been so particular about establishing main residence... seems its to do with the council tax as some people claim discounts, but this is not the case for me.

From the above answers it seems HMRC's main concern is CG issue and expenses claims, the expenses claims don't bother now, I just decided to take a very good permie offer, we'll see how it goes.

Will try to read up on the CG issue.

[LisaContractorUmbrella]

I think the OP maybe talking about home 'flipping' a la politicians - SandyD are you talking about expense allowances?????

[northernladuk]

Where did I ask about the mileage claims etc... my question has nothing to do with that !!

Your question is so ambiguous and confusing we are trying to cover all posts. You didn't make it clear if you were talking about personal taxation, business taxation, expenses or squat hence Lisa's question, which you didn't really qualify very well. I mean, you don't even know yourself why you were asking 'I suppose from a tax implication'... Claiming expenses is a tax implication and switching residencies and will mean a changes to a) charging rent and b) mileage to your client... So it is a valid point. Just because you don't have a bloody clue what you are even asking don't moan about it.

My apologies for trying to add a bit of proactive advice.

[SandyD]

If CGT is not an issue, what do you mean by "your main home"? What does it matter?

Are you by any chance thinking of what will be your company's home office, from which it will send you to travel to client sites? Because that might be more complicated.

If you own both properties and spend part of every week in each, I'd guess that you are resident in both. But the answer will be easier if you ask the right question. And it may be different depending on the question.

I did want to know the CGT as well, its not an issue now as I don't intend to sell, but it will be good to know for the future.

Like you say I didn't think it matters, but wonder why HMRC and councils are so particular about that? I think perhaps from a rental / tenants issues?
This is why am asking about the reason and legality of changing the main/principal residence.

[SandyD]

If you have been working in the same geographic location for over 2 years you can't claim anything so it makes no difference what you do. You can't claim rent/mileage anyway.

Where did I ask about the mileage claims etc... my question has nothing to do with that !!

[Ignis Fatuus]

If CGT is not an issue, what do you mean by "your main home"? What does it matter?

Are you by any chance thinking of what will be your company's home office, from which it will send you to travel to client sites? Because that might be more complicated.

If you own both properties and spend part of every week in each, I'd guess that you are resident in both. But the answer will be easier if you ask the right question. And it may be different depending on the question.

[northernladuk]

If you have been working in the same geographic location for over 2 years you can't claim anything so it makes no difference what you do. You can't claim rent/mileage anyway.

[SandyD]

I suppose from a tax implication.

I wont move back in property one until the tenancy term is completed which will be in a few months. So that should be no issue I hope.

I suppose can I change what is considered my main/principal home at any time or is there a specific time period in which one has to decide?

Also if I move back into the first property, I would be renting out the second property as rooms and will keep a room for me there so if I can stay there 3 nights or so a week to be closer to work.
So the split between the two properties would be 4/3 or 4/3 ... would I still be able to claim that the first property is my main residence even if I am staying away in the second property a few nights a week?