What CGT relief is available?
If you nominate the home being sold as your PPR, you will be exempt from any CGT relating to the past three years of ownership. CGT is normally charged at 18 per cent on any profits made. For example, if you had owned a second home for four years and decided to sell, by electing it as your main home you would only be liable for CGT on one quarter of the profits made.
How long must a home have been my main residence before qualifying for the exemption?
If selling your second home, you can elect it as your principal residence for just a short period, even a week, before flipping back to your other property.
Do I actually have to spend the most time in my principal residence?
No, you can elect any of your properties as your main home, no matter how much of the year you spend there. However, you will need to prove that it has been your main home while being treated as such - bank details could be registered for that address, for example.
When do I have to decide which is my main residence?
You need to choose your main home within two years of buying the second property. Should you not do so, the Inland Revenue will decide which to use as your PPR based on the time you actually spend there.
Is there a limit on the number of times I can change my main home?
As long as you decide which property to use as your principal residence within two years of buying the second property, you can flip it as many times as you like.
Can married couples select two PPRs?
No. If you are married you must jointly choose one property as your main home. However, umarried couples can own a property each that qualifies as the principal residence.
How do I go about doing all this?
More information can be found on the HM Revenue & Customs website. We recommend you consult an accountant if in any doubt.