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Can you please explain this rule:
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.So what happens if after a period of actual occupation there are two deemed period of occupation (say travel in the UK and overseas – both for work purposes) followed by actual occupation – will they be treated as exempt or non-exempt as there is deemed occupation and not actual occupation…??
Thanks
If the taxpayer is either in employment overseas or elsewhere in the UK they are by concession, not required to return to the property to qualify for the deemed periods of occupation. If, however the taxpayer wanted to take advantage of the 3 years for any reason then a period of actual occupation must occur after this absence and before disposal. Also remember that the last 3 years of ownership are never chargeable whatever the taxpayer is doing and wherever they are doing it!!!!!
Hello,
I’ve a question in this regard. According to the PPR relief rules, if the taxpayer is in employment overseas (or anywhere in UK), he is not required to return to the property to treat it as deemed occupation period. However, in one of the past exam questions, the second “period of working overseas is not counted as a period of deemed occupation as it was not followed by a period of actual occupation”. This treatment conflicts with the rules. Why would it need an actual occupation when the absence was for work related reasons?
Here is the reference to Dec 2011 Question no. 3:
Jorge Jung disposed of the following assets during the tax year 2010–11:
(1) On 30 June 2010 Jorge sold a house for £308,000. The house had been purchased on 1 January 1993 for
£98,000, and throughout the 210 months of ownership had been occupied by Jorge as follows:Months
16 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
21 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 1993 to 30 June 2010 Jorge did not have any other main residence.Thanks in advance,
Hi Tania the taxpayer is not required to return to the property if prevented from doing so by reason of that employment ie the taxpayer is still working overseas. In the example you quote above, however, the taxpayer is no longer in that employment at the time of sale of the property having instead gone travelling overseas and then gone to live with sister. I presume the answer did however exempt the last 36 months!
Good luck in exam!Is this topic still live? I had a question regarding PPR. What happens to the annual exemption allowance?
Yes knowledge of PPR relief is still required. If the gain on the PPR is not fully covered by PPR relief and lettings relief, so that a chargeable gain arises it will be included with other gains and losses of the tax year to establish the net gains, from which we then deduct the annual exempt amount to compute the taxable gain.
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