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On 30 June 2019 Jorge sold a house for £308,000. The house had been purchased on 1 January 2002 for
£93,000. On 10 June 2008, Jorge had incurred legal fees of £5,000 in relation to a boundary dispute with his
neighbour. Throughout the 210 months of ownership the house had been occupied by Jorge as follows:
Months
34 Occupied
18 Unoccupied – Travelling overseas
24 Unoccupied – Required to work overseas by his employer
11 Occupied
30 Unoccupied – Required to work elsewhere in the United Kingdom
by his employer
22 Unoccupied – Travelling overseas
26 Unoccupied – Required to work elsewhere in the United Kingdom
by his employer
17 Occupied
12 Unoccupied – Required to work overseas by his employer
13 Unoccupied – Travelling overseas
3 Unoccupied – Lived with sister
210
Jorge let the house out during all of the periods when he did not occupy it personally. Throughout the period
1 January 2002 to 30 June 2019 Jorge did not have any other main residence.
______________________________________________________Answer:In calculating the principal private residence exemption, any periods of absence while working overseas, a
maximum of four years’ absence while working elsewhere in the UK, and a maximum of three years’ absence for any reason are treated as deemed occupation, usually provided that they are preceded and
followed by a period of actual occupation. The second period working overseas is therefore not a period of deemed occupation as it was not followed by a period of actual occupation.Hello Sir, hope youre safe, Isn’t the working overseas requirement an exception to the rule and hence all of working overseas period shall be treated as deemed occupation. But the answer says something else
Yes thank you we are safe and hope that is also true for you and your family in these difficult times.
In respect of your question the concession that states the taxpayer is not required to occupy the property following a period working overseas is ONLY applicable if at the time of sale the taxpayer is prevented from returning to the property by reason of still being employed overseas – in the information you quote above the taxpayer is no longer in overseas employment at the time of sale and is not therefore prevented from returning to the property by reason of that employment.
This point is made in the study notes – note 5.2 on page 88 – and in the lecture on PPR
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Hi Sir,
Piggyback on his question, why the 18 of the 22 Unoccupied months – Travelling overseas is regarded as deemed occupation per BPP solution? I read from your notes, and I thought deemed occupation must be precedented and followed by actual occupation unless the term of the work requires him to work elsewhere.
You have not provided me with all the BPP answer but the 22 months travelling overseas is nothing to do with work overseas.
Prior to that 22 months there was an earlier 18 months of travelling overseas – I presume that in the answer this period was classified as deemed occupation using 18 months of the “3 years for any reason” rule for deemed occupation, thus leaving 18 more months available for future use. The second period of travel overseas is however 22 months, meaning that only 18 months of this period will be treated as deemed occupation.- Topics: 43
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@Taxtutor said:
You have not provided me with all the BPP answer but the 22 months travelling overseas is nothing to do with work overseas.
Prior to that 22 months there was an earlier 18 months of travelling overseas – I presume that in the answer this period was classified as deemed occupation using 18 months of the “3 years for any reason” rule for deemed occupation, thus leaving 18 more months available for future use. The second period of travel overseas is however 22 months, meaning that only 18 months of this period will be treated as deemed occupation.Hi Sir,
Yes, you assumption is correct. But from your notes, I remember you said maximum 3 years for any reasons are also deemed occupation, but if that is the case, shouldn’t it follow that same rule applies here, ie deemed occupation must be precedented and followed by actual occupation? And the 22 months overseas travelling is wedged between 30 months unoccupied because of required work elsewhere in the UK and 26 months unoccupied because of required work elsewhere in the UK. So why 3 years deemed occupation for any reason is still applicable here?
Oops, I’m sorry, my bad sir.. I totally forgot to take that into account Thanks a ton!!
No problem draiells – hopefully lukayi you have seen that at some point after the period of travel overseas and before the sale there has indeed been a period of actual occupation – according to the information provided, a period of 17 months
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@Taxtutor said:
No problem draiells – hopefully lukayi you have seen that at some point after the period of travel overseas and before the sale there has indeed been a period of actual occupation – according to the information provided, a period of 17 monthsHi Sir,
Can I rationale as following: the rule that deemed occupation must be precedented and followed by actual occupation does not distinguish which deemed occupation it is (4 years work elsewhere in the UK, 3 years any reason, or any period work overseas)? That as long as they are deemed occupations, the treatment specific to this rule is to regard them as one deemed occupation, provided that the length of the period is not violated with regard to other rule pertaining to particular deemed occupation (4 year domestic work elsewhere and 3 year for any reason)?
The simple answer to your statement is no – the rules that you do need to learn are however clearly stated in the OT notes – chapter 14 section 5.2 noting carefully the short paragraph below points (a) to (d) and also of course my comments above as to how these rules have been applied in this example.
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