From:  google@woodall.me.uk
Newsgroups: uk.finance
Subject: Re: Principal Private Residence
Date: Tue, 25 Sep 2007 02:09:50 -0700
   posting-account=ps2QrAMAAAA6_jCuRt2JEIpn5Otqf_w0
Bytes: 3805

On Sep 25, 9:01 am, JimBob  wrote:
> Hi,
>
> We're getting some great thought-provoking exchanges on this issue and
> I'm most grateful.
>
> There is one other aspect that I want to explore more closely - ie the
> idea that  I just move back in there for a while after the current
> tenants leave. Having been tenanted out pretty much for the last 30
> years, it is in really desparate need of upgrading.
>
> I'm due to retire soon and I could usefully spend productive time
> living in Property A whilst I upgrade things like the bathroom &
> kitchen and redecorate etc etc. This could take say 6 to 8 weeks.  My
> wife would not be happy puting up with the discomfort  involved so she
> would opt to stay in property B.
>
> By staying there ( possibly with my son) and with all the utility
> bills in my name etc the question is would that enable me to classify
> it as my main residence. If it did then it would have the added
> benefit of establishing it also as my son's PPR.  If it's relevant,
> all the utility bills for property B are in my wifes name.

I'm no expert on this but, excluding the posibility that there are
special rules because you are expat, moving in can make absolutely no
difference to you unless you intend to stay there for more than three
years because you already get the last three years.

There are all sorts of complications to the tax calculation due to
revaluing the property at a certain date, then indexation relief and
then finally taper relief. I'll ignore most of that but you need to
talk to an accountant to get it done properly.

But (naively, ignoring all the complications due to rebasing and
indexation relief) it would go something like this:

33 years ownership, 4 years residence (1+last 3). And let's assume a
gain of 200K

29/33 * 200K = 175K Taxable gain
4/33 * 200K = 25K

Residential lettings relief = 25K

Gain after RLR = 150K

Taper relief 60%

Taxable gain = 150K*60% = 90K

CGT = 90*.4 = 36K

CGT allowance 9K

Total tax bill if you just give the house to your son = 27K

But you could give him (approx) 25% each year without having to pay
any CGT tax (Unless you already have other gains and are using up your
CGT allowance each year).

(I am not an accountant)

Tim.