Converting house into flats- CGT/letting relief

[Lho]

My husband and i recently sold our flat which is our main residence for 6 years, so there is no CGT. We have subsequently bought a house which we intend to convert into 2 flats and remortgage to BTL on both flats. The house will be our main residence for 6 months while refurbishing and renovating. If we were to sell both flats in say 5 years time, do we get PPR relief for staying in the house for 6 months? Will we also get the letting relief as well?

Please help.

[Tax Accountant]

My husband and i recently sold our flat which is our main residence for 6 years, so there is no CGT. We have subsequently bought a house which we intend to convert into 2 flats and remortgage to BTL on both flats. The house will be our main residence for 6 months while refurbishing and renovating. If we were to sell both flats in say 5 years time, do we get PPR relief for staying in the house for 6 months? Will we also get the letting relief as well?

Please help.

On the face of it, you have no intention of using the house as your only or main residence. In my opinion, living in the house for 6 months for the purpose of renovating it would not amount to using it as your home for PPR relief purposes.

Also PPR relief is denied where you acquire a property or spend money on it in order to realise a gain on its disposal.

I think you should seek professional advice to ascertain the correct position based on your precise circumstances.

Ramnik

[Lho]

Thanks,
I will get a professional advice.

Lho

[Tax Accountant]

Thanks,
I will get a professional advice.

Lho

Yes, best to do this.

You may be told that PPR relief and lettings relief will be allowed if you lived in the house as your residence for 6 months. In theory this is OK. It is only my opinion that you will be denied PPR relief and the resultant lettings relief based on the facts stated in your posting above.

If it is plainly evident that from the outset you never intended to live in the property on a long term basis and that you only occupied it for the purposes of renovating it, I can't see much hope.

Quite often a minimum residence period of 6 months is mentioned to qualify for PPR relief. However, there is no minimum period of residence required to qualify it for PPR relief. The actual decision on whether you have used the house as your only or main residence is subjective and dependent on actual facts surrounding your intentions and actual use of the property as your residence.

Ramnik