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Principal Private Residence Election Question

Hello,

I have one property in London that I bought about 2 years ago for £280k. This is where I live and work. I also bought a second property in Wales last October for £126k. I am not renting out the 2nd place in Wales but may do in the future. I am thinking of moving to Wales but have not made up my mind and might well not do so before the 2 years is up before I need to elect a property. I expect the property in London will make the most gain in the longer term. Could anyone advise which one I should elect as my primary residence?

Many thanks
That’s easy ! You can’t elect for a property to be treated as your PPR unless you actually live there as a residence for some of the time. So it looks as though London is your only residence at the present time and no election is required (or appropriate).

In order to be able to elect for a property to be your main residence, you must spend some of your time in it as a home. You will not be able to elect for the Welsh property to be your PPR at a time when it is rented out or left unused.

Assuming that you go to Wales on holiday, and sopending time in that property is not a problem, then you can indeed choose.

You should choose the property that is most likely to produce the larger gain on a sale. I suspect that will be the London property. That is probably already your PPR on the basis of fact. However, you should still submit an election because that leaves the door open to switching to the Welsh property at any time in the future – i.e. you do not need to worry about the 2 year time limit once you have an election in.

For example, were you to sell the Welsh property, you could elect for it to be PPR just before the sale and 3 years’ worth of the gain would be exempt. After the sale, your other property would of course revert to being PPR, having only lost a few days’ PPR status itself.

You should take specific advice before doing anything about this.

To expand on that if you are in a position to need to make an election and expect London to produce the larger gain then consider making an election within the 2 year initial time limit re Wales and then vary it back to London a week later.

That then gets both properties sorted for some relief (Wales final 3 years + 1 week, Lonon whole ownership – 1 week).

HMRC Manuals accept this as valid, and it is anyway under the legislation, and you have got it out of the way at before it gets forgotten, and still have the option to revise the election further if circumstances change so that you might wish to vary things