Capital Gains - Principal Private Residence. Renting?


P

Philip Herlihy

I understand that there is a fresh option to nominate a residence as your
Principal Private Residence for CGT purposes at every change in the number
of residence which you use. Would the commencement or termination of a
rental tenancy count? Hypothetical, but curious.

More generally, how long do you have to use a residence for it to count?
Obviously, a weekend wouldn't be enough, but three months? One month? Two
years?

Phil, London
 
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R

Ronald Raygun

Philip said:
I understand that there is a fresh option to nominate a residence as your
Principal Private Residence for CGT purposes at every change in the number
of residence which you use. Would the commencement or termination of a
rental tenancy count? Hypothetical, but curious.
Yes, but while commencement of a tenancy clearly terminates a period during
which a dwelling can be one's residence, termination of a tenancy is not
enough to give a dwelling residence status. You do actually have to make
it your home and physically occupy it.
More generally, how long do you have to use a residence for it to count?
Obviously, a weekend wouldn't be enough, but three months? One month?
Two years?
There is no minimum qualifying time limit as such. It is not quantity of
occupation, but quality of occupation which counts, but to establish
quality, you need to show that there is "some assumption of permanence,
some degree of continuity, [or] some expectation of continuity".

Although unlikely, a weekend could be enough. But you'd need to establish
there was intent that it was going to be for longer. It may be difficult to
establish such intent if you're going to move in a new tenant a few weeks
after the old one has gone, and use it as your own home only for the
intervening weeks. It would be fatal if it were to transpire that you
actually signed the new tenant up in advance, and then moved in yourself
knowing it would only be for a short time.
 
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P

Philip Herlihy

Ronald Raygun said:
Philip said:
I understand that there is a fresh option to nominate a residence as your
Principal Private Residence for CGT purposes at every change in the
number
of residence which you use. Would the commencement or termination of a
rental tenancy count? Hypothetical, but curious.
Yes, but while commencement of a tenancy clearly terminates a period
during
which a dwelling can be one's residence, termination of a tenancy is not
enough to give a dwelling residence status. You do actually have to make
it your home and physically occupy it.
More generally, how long do you have to use a residence for it to count?
Obviously, a weekend wouldn't be enough, but three months? One month?
Two years?
There is no minimum qualifying time limit as such. It is not quantity of
occupation, but quality of occupation which counts, but to establish
quality, you need to show that there is "some assumption of permanence,
some degree of continuity, [or] some expectation of continuity".

Although unlikely, a weekend could be enough. But you'd need to establish
there was intent that it was going to be for longer. It may be difficult
to
establish such intent if you're going to move in a new tenant a few weeks
after the old one has gone, and use it as your own home only for the
intervening weeks. It would be fatal if it were to transpire that you
actually signed the new tenant up in advance, and then moved in yourself
knowing it would only be for a short time.
Thanks, RR! I note your points on permanence and continuity. I'd actually
been thinking of a tenancy where the (potential CGT payer) was the tenant,
not the landlord. So, if you have, say a couple of established residences,
and the "wrong" one is your Principal Private Residence (because you
neglected to nominate it within the two-year period) then would you get a
new two-year nomination window if you found yourself renting a further
residence for a while - perhaps while working away from home(s)? I read
somewhere that you get a new two-year windows if the number of your
residences changes (up or down) and I was wondering if this included
residences which you occupied as a tenant. I should add this is more about
my trying to understand the rules than any likely scenario!

Phil

Phil
 

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