When you dispose of your residential property, you will accumulate a capital gains tax (CGT) on it. But you can get exemption from the same partially or fully with the private residence relief (PRR) and today we will discuss how. We will also discuss what affect the application of these instruments and whether any exceptions apply. However, if you are in Berkshire or Bedfordshire and want to know more about this, you will need to get in touch with your friendly tax advisor.
How the Private Residence Relief Works
To get private residence relief, you need to consider a few important factors.
Firstly, if you live in the house, it will be regarded as a ‘dwelling house’ and you are eligible for the relief. Also, if you have a garden or a garage, those will be counted. However, if you are living in the property for a few weeks only, you might not become eligible for the relief. But in these cases, the HMRC will assess whether you can apply for the PRR.
Apart from only ‘living’ in your property, you will need to cook, sleep and spend your time in leisure if you want it to be considered as a ‘dwelling house’ and get relief from CGT. On the other hand, if you use your property for business purposes, you will not be entitled to the relief. Also, if you have more than one property, you will need to notify the HMRC about the one that you consider to be your main residence. But if you are facing difficulties in the process, hiring a tax advisor in Reading & Wokingham in Berkshire County will be required to simplify it.
PRR When You Are Married
If you are married, you and your spouse can only have one residential property if you want to become eligible for the PRR. However, if you and your spouse own individual properties and are still using them post-marriage, a joint nomination will be required to consider only one of these two properties to be eligible for the relief. But you and your partner can decide which of the properties should be considered for relief.
You will need to keep in mind that after the nomination, the other property will be liable for capital gains tax. To know more details on this topic, it’s best to consult a tax advisor in Hurst, in Berkshire County.
Periods of Absence Considered When Calculating the Relief
If you are not residing in your property for a certain duration, you are still eligible for PRR.
When it comes to your absence in the property, it should not exceed three years. Also, you will not be eligible for the relief if you are employed outside of the UK. But if you are in the UK and need to move to a different country as required by your employer, it should not exceed four years.
However, if you are staying at your residence for the last 18 months, for instance, and want to sell it, you will be eligible for the PRR. Still, if you want to know more on the topic and stay in north Bedfordshire, you will need to hire a tax advisor in Riseley for detailed guidance.
New rules when it comes to PRR
With effect from 6th April, 2015 the PRR rules were amended and the new rules are applicable for both UK and non-UK residents.
Here, to get the tax relief, you have to be a tax resident and have to spend 90 nights on your property in the tax year. But there are other regulations too which a professional tax advisor can provide you with.
Qualified Accountants Ready to Assist You with PRR and CGT
If you are searching for chartered certified accountants in Reading and other areas of Berkshire County, Biz Accounting Solutions Ltd is here to meet your needs. So, call us if you want to book an appointment with our accountants.