Can you choose your PPR

Hello, my parents have two homes, one in the city, one in the country.
They are both retired and spend each weekend in the country home and the rest of the week in the city home. They spend all summer in the country home.

They have the country home for 30 years and the country home is now worth twice what the city home is. If they neeeded cash in the future for care or whatever, then they are more likely to sell the country home. In this instance to avoid CGT, it would probably make sense for them to make the country home their principal private residence.

My question is: how does one go about declaring that a particular house is your PPR ? Do you make a declaration to the Revenue or do arrange matters (eg car insurance addresses etc.) that imply that one house is your PPR ?

PPR is usually where you live most of the time. I would imagine that if you live 5 days a week in one house and only 2 days a week in another, the 5 days one would be PPR. Revenue usually use where you are at the stroke of midnight when counting the days. Also, as your parents are retired, they cannot use work as an excuse for being away from PPR for more that 50% of the midnights in a year.

Thanks for that. In relation to number of days in the different houses, they typically spend 3 nights in the country and 4 nights in the city. During the summer time, they spend probably 6 nights in the country and 1 in the city.

Over the 12 months of the year, the split would be very close to 50/50.

Does this have any bearing on the outcome ?

If it is 50:50, it would be best to insure that they get all their importantant documents (Revenue/Bank/Insurance/Pension/Shares/Driving Licence etc) sent/changed to the house they want as a PPR.

If they neeeded cash in the future for care or whatever, then they are more likely to sell the country home.

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Is this purely because they will get more cash for the country home?......or is it a freudian slip whereby they are inadvertantly admitting that they regard the city house as their actual residence and the country house as a holiday home?

csirl, they would be more likely to sell the country home because travelling to the country home could become more of an issue as they get older. They need a car to travel to this house. They may not always be able to drive I am afraid.

Towger, I think that is what I will suggest to them. Get all important documentation adressed to the country home.

Thank you both for your help.

In the case where more than 1 house can be considered your PPR you must write to the Inspector of Taxes stating which house you choose as your PPR. This must be done within 2 years of the intitial change in PPR status.

If the Inspector agrees, this house will be deemed to be their PPR for the taxable period(s) in question.

Remember that the CGT exemption will only apply for periods whre the Inspector agrees the house is you PPR. For example if your parents owned both houses for 10 years and received an agreement from the Inspector that the country house has been their PPR for the past 2 years then if they sell the house in 5 years (having maintained its PPR status since the original agreement) then 7/15 of the total gain would be exempt. If they sold their city home at the same time then 8/15 of that gain would be exempt (rough example, but hopefully you get the idea).

henry said:

csirl, they would be more likely to sell the country home because travelling to the country home could become more of an issue as they get older. They need a car to travel to this house. They may not always be able to drive I am afraid.

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There is a flaw in your logic !!

They wont need to travel to the country house if they sell the city house (because they will live in the country house).

They won't have anywhere to travel from !!!!

LouisCribben said:

They won't have anywhere to travel from !!!!

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Quite true, however unless there's a 24 hour Tesco in the acre next to them they might well have somewhere to travel to once resident in the country and if driving becomes an issue as the OP said, dependency on others for such basic needs might make that property impractical.

What happens re CGT in a variation of OP position as outlined.
If family has 2 houses, neither ever been rented out. The current PPR is house A.
They move completely to house B and declare that as their PPR, leaving A empty and unrented. One year later (say) they sell house B, and move back to house A. Do the have CGT liability on house B sale?

runner said:

What happens re CGT in a variation of OP position as outlined.
If family has 2 houses, neither ever been rented out. The current PPR is house A.
They move completely to house B and declare that as their PPR, leaving A empty and unrented. One year later (say) they sell house B, and move back to house A. Do the have CGT liability on house B sale?

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It's the period of residency as the PPR in relation to the period of ownership which matters for PPR CGT relief. So basically in that case you outlines you cannot totally avoid CGT by just moving for a year over & back. There may be relief for the 1 year of residency however.

Thanks Graham.
If house B was a newly build house, whereby residency in B was therefore from the beginning, I wonder what would apply ? Presume they would be liable for cgt on B somehow?

runner said:

Thanks Graham.
If house B was a newly build house, whereby residency in B was therefore from the beginning, I wonder what would apply ? Presume they would be liable for cgt on B somehow?

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The would be no CGT on house B in this scenario, however, they could not claim PPR relief on house A for this period.

So if they move back to house A as their PPR, they are resident there all but one year in say the 20 years the own it. PPR relief of 1 in 20 would not be a problem anyway. They would be moving back permanently to house A again.
What im really asking is can they legitimately avoid the CGT on selling the new house, by simply moving between the two as descibed?