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Capital Gains Tax: PPR And The Main Residence Election

Let's get flipping ...

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Posted by Helen Beaumont on 16/10/2019 @ 8:00AM

Any gains you make from the disposal of a second property can be exempt from Capital Gains Tax if the property is, or was, the owner's main residence at some point ...

Save on Capital Gains Tax when disposing of a property by flipping the election to it, sell it, then flip back to the main home!

Save on Capital Gains Tax when disposing of a property by flipping the election to it, sell it, then flip back to the main home!

photo by sam healey on unsplash

To save Capital Gains Tax, the property doesn't have to be the owner's main residence at the sale date, but should have been for some of the time of ownership. The last 18 months of ownership are exempt, as is the period of residence.

"As of the 6th April 2020, this exemption period is reduced to 9 months!"

If you own a second home you can still take advantage of the Principal Private Residence (PPR) exemption by electing a property to become the principal residence. The nominated property can be in the UK or abroad.

Once you've made the election, you can flip to the other residence as often as you like, providing you tell HMRC within 2 years of acquisition of the property. If you delay occupation, then the date of moving can be used.

It makes good sense to plan the election as soon as a second property has been purchased. If you're selling more than one property, ensure the election of PPR is on the property that will make the most gain on the sale, meaning the most Capital Gains Tax will be due. If you don't make an election, HMRC will do it for you, which won't be to your advantage.

So, if you're selling a property, flip the election to it, sell it, then flip back to the main home. You lose PPR on the main home for the duration of the sale of the other property, but this will be an insignificant amount in the big scheme of things and it will mean you save on Capital Gains Tax overall.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.