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Principal Private Residence Election Issues – Elect or Lose
Individual taxpayers who benefit from the ownership of a second property – whether they rent or own the property in which they are living – should already be aware of the issues of Capital Gains Tax liability for an unelected property.
Where a taxpayer has two residences, only the property which is the main residence qualifies for relief from Capital Gains Tax liability as the Principal Private Residence (‘PPR’). The tax payer needs to seek advice on appropriate elections to their tax district on all types of ‘dwelling house’ and flats. We can provide detailed help with such elections, including more complex circumstances such as multiple properties in a block or multiple buildings used as a single dwelling. Detailed advice should be sought in this regard before any commitment is made and mindful of the risk of losing the ability to elect if action is not promptly taken.
In the absence of an election the question of which property is considered to be the PPR becomes a question of fact and all flexibility is lost. As a result, even if the taxpayer feels it unlikely that future switching will be required it is certainly worth considering and seeking advice on an election as soon as the acquisition of a second or subsequent property is made, to avoid losing future opportunities.