Private Residence Relief is granted automatically on the sale of property that you have always lived in as your home meaning that Capital Gains Tax is not payable on any gain made on the property. You can also claim PRR for periods of time that you have lived in the property and until recently if you had ever lived in the property, then for the last 36 months of ownership you would have been deemed to have lived there. This was reduced to 18 months in the 2014 Autumn statement.
If you wish to claim a main residence exemption you need to compile evidence in support of this, especially if you own multiple properties. The occupation of a property does not necessarily make a person “resident” there for tax purposes. We look at the evidence and recommendations to come out of the case of Alison Clarke vs HMRC.
In the case of Alison Clarke vs HMRC the problem was that C could not provide documentary evidence to support the view that the properties were viewed as a residence with some degree of permanence or some degree of continuity or expectation of continuity. The result was that the tribunal rejected her appeal and found for HMRC.
The Tribunal were however very helpful in that in making their decision the made reference to the “Jigsaw of evidence” that could have provided support to C’s claim. Examples given were as follows:- letters received when living at the property, photos of herself in occupation,T.V licence or utility bills in her name or the registration of her car at the property. They also made reference to her being able to afford to live at the property on a long term basis. Whilst none of these factors individually constitute residence the overall picture does support this view.
Park Lane Accountants would advise clients wanting to claim that a property is their main residence, particularly if owned for a short time, must make sure that they keep documentary evidence to support their occupation. Park Lane Accountants offer practical advice on all aspects of tax planning. We are friendly and approachable and can be contacted on 01249 247160 or by e-mail