Private Letting Relief - two year election limit

[MOLYVOS]

Hi,

I understand that if you have two private residences that it is beneficial to formally elect one of them as your main residence (by writing to the Revenue), and that the election has to be made "within two years".

However, I am unclear as to whether that means two years from when you acquired a second property or two years from the date both were used as private residences for ourselves?

eg: We bought a second property 3 years ago, which has been let (to a family member under a formal tenancy agreement) for the whole three year period. Is it now too late to make that election, or has the two year period not yet started?

Thanks/Regards

[TaxationPete]

As the property is rented out it is not avail for you to be resident so there is no window open. It sounds to me that this intended as a rental property not a second home. However if they move then it is available and you may be abe to nominate it then but it has to quality as you residence fo staying ther and being furnished and full coucil tax is required. Regards Peter

[MOLYVOS]

Thanks Peter,

Initially, we would elect for our current home to be our main residence.

However, I understand that by formally making that initial election (even though it is stating the obvious at the time) we would then have the right to change that decision at a later date, for periods as short as a week (backdated upto two years from that date), simply by writing to the Revenue again, so that the second property can then attract both letting relief and the final three year exemption for CGT.

But if we fail to make that initially election "within the first two years" then residence would be determined on an actual basis only, with the Revenue having the final say.

From what you are saying, that initial two year period only starts when both properties are available for us to live in, which is good news- and the answer I was hoping for!

Thanks again.

[TaxationPete]

No, you can not elect your factually PPR as your PPR and start the clock. The clock starts when you have a 'New' combination of properties that either of which could be your residence Read the rules on the web site. Regards Peter

[MOLYVOS]

I understand. I should have added that we won't be making that election until the second property is no longer let and is available to us as a second home.

Thanks again.

[TaxationPete]

But are you going to stay there at all, weekends, a holiday or what. At present is is a property NOT a residence Enter Property Nomination in the seach window on the HMRC web site.

I have come across several cases where HMRC have clamped down on this as the property has been placed on the market as soon as the tenants have left and the Nomination was been rejected when the LR notified HMRC of the sale and the DV department checked it out. One case last year was a guy who moved in after the tenants had left and put it on the market and sold it but claimed PPR that was rejected. So what is your plan.

Regards Peter

[MOLYVOS]

At some time in the future we do plan to use the property ourselves for weekends and short breaks, possibly even for much longer periods, before eventually putting it on the market or renting it out again. So there should be a period, possibly a year or two, when both properties are available to us at the same time.

It's only at the start of that period that we now intend to make the first election, with the other changes (making the second property the main residence for a short, as yet unknown period, before reverting back to the first one) lodged towards the end of that time (or even slightly later, as I understand future changes can be backdated for upto two years from the date the change is notified).

Are we on safe ground with these plans?

Thanks

Stephen