Two properties - which should be my PPR?

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Calico

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I have two properties and looking for advice on which should be my PPR.

Property 1: 2-bedroom apartment, rural Ireland. Value for CGT purposes: €250,000. Current est. value €200,000. Currently my PPR.
Property 2: 1-bedroom apartment, Dublin city centre. Value for CGT purposes €290,000. Current est. value €300,000.

I inherited Property 1 at the height of the boom and availed of PPR relief at the time.
I bought Property 2 in 2018 with a mortgage. It was not an investment mortgage as despite already owning a property, I still qualified as a FTB.

Neither property has every been rented, but I would like to do this in the future in order to travel.

Someone advised me recently to change my PPR to my Dublin apartment for CGT reasons which was something I never considered before.

Is he correct?
 
Calico said:
Is he correct?
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You cannot have two PPRs. Your PPR is where your friends and family would expect to find you. It is not really relevant until you want to claim PPR relief on sale at a future point. Corrected, see below.

If you own two properties of course your PPR can change from one to the other, but make sure you are able to document it in if Revenue ever challenge you!
 
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I should have clarified, I divide my time between both places so could be expected to be found in either place. I have bills etc. in my name going to both properties. I just assumed the rural property remained my PPR unless I formerly changed it.
 
Calico said:
I divide my time between both places so could be expected to be found in either place.
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I looked it up and apparently you can in advance of sale declare which of your properties is your PPR.

See here.

3.16 One main residence only Where a taxpayer has more than one residence (see para 2) for any period, the Inspector may reach agreement with him or her as to which of these is to be treated as his or her main residence, provided that the taxpayer gives notice in writing to the Inspector within 2 years of the beginning of that period (or by 5 April, 1976, if that is later).
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So if indeed you do spend half your time in each property it does indeed make more sense to deem property 2 as your PPR as there is going to be more of a gain whenever it is time to sell.
 
Thanks Coyote....so if I understand it correctly, I should write to Revenue now and tell them I want Property 2 to be my PPR?
 
Calico said:
Thanks Coyote....so if I understand it correctly, I should write to Revenue now and tell them I want Property 2 to be my PPR?
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That's what the rules allow, and backdated for two years.

I have no idea about how to do this practically, maybe someone else can advise.
 
T McGibney said:
No, do not do that under any circumstances. What have you to gain by showing your hand now?
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İf I can only backdate it by two years, is it not advisable to do this ASAP and thereby minimise any potential CGT bill? (Although I I have no plans to sell either any time soon.)
 
Calico said:
İf I can only backdate it by two years, is it not advisable to do this ASAP and thereby minimise any potential CGT bill? (Although have no plans to sell either any time soon.)
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I don't know where you got the idea of backdating anything. It's nonsense. Your PPR status is a matter of fact. It doesn't need to be buttressed by periodic declarations. You seem to be in a lucky position where you can suit yourself by building a reasonable case that either one of two properties can credibly be treated as your PPR. If you tie yourself up in knots now by making a superfluous declaration, you risk losing this advantage.

My own general recommendation would be to never engage with Revenue in relation to a technical issue such as this unless you both know exactly what you are doing and have confirmed this by engaging specialist professional advice based on a close assessment of your circumstances, and in this case your ownership history of each property.
 
T McGibney said:
I don't know where you got the idea of backdating anything. It's nonsense. Your PPR status is a matter of fact. It doesn't need to be buttressed by periodic declarations. You seem to be in a lucky position where you can suit yourself by building a reasonable case that either one of two properties can credibly be treated as your PPR. If you tie yourself up in knots now by making a superfluous declaration, you risk losing this advantage.

My own general recommendation would be to never engage with Revenue in relation to a technical issue such as this unless you both know exactly what you are doing and have confirmed this by engaging specialist professional advice based on a close assessment of your circumstances, and in this case your ownership history of each property.
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I agree with you 100%. However the link from Coyote implies there is a two year window from when the declaration can be made in order to count against a CGT bill. Given that I availed of PPR relief for property 1 and have never engaged with Revenue since it is arguable that it continues to be my PPR by default.
 
T McGibney said:
It doesn't need to be buttressed by periodic declarations.
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So why do Revenue give the taxpayer the option of doing so? I assume it is so that in 20 or 30 years whenever you go to sell the one or other property there is less scope for debate about which property was the PPR, which of course becomes increasingly difficult to prove either way the further you go back in time.

T McGibney said:
My own general recommendation would be to never engage with Revenue in relation to a technical issue such as this unless you both know exactly what you are doing and have confirmed this by engaging specialist professional advice based on a close assessment of your circumstances, and in this case your ownership history of each property.
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I agree with this.

However the OP asked about declaring one of his two properties his PPR and there does seem to be a procedure for this.
 
NoRegretsCoyote said:
So why do Revenue give the taxpayer the option of doing so?
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You'll have to ask them.
NoRegretsCoyote said:
I assume it is so that in 20 or 30 years whenever you go to sell the one or other property there is less scope for debate about which property was the PPR, which of course becomes increasingly difficult to prove either way the further you go back in time.
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A State of affairs that should suit this particular taxpayer once they don't unnecessarily give up that advantage.

It wouldn't be the first instance of a Tax & Duty Manual being subtly worded in order to mislead innocent taxpayers and benefit Revenue.
NoRegretsCoyote said:
However the OP asked about declaring one of his two properties his PPR and there does seem to be a procedure for this.
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Yes there is a procedure - complete a Form CG1 CGT Tax Return, claim PPR relief as appropriate, and have your homework done to justify that claim.
 
T McGibney said:
Yes there is a procedure - complete a Form CG1 CGT Tax Return, claim PPR relief as appropriate, and have your homework done to justify that claim.
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I take your point, but OP in 20 years time could be left trying in vain to prove a negative. We are talking about a situation where a person splits their time equally between their two dwellings so there will be no better evidence that property 2 is PPR over property 1 in his case. However if it is noted on file from 20 years ago that property 2 is PPR then there is much less potential for debate.

I am speculating here, but I imagine the procedure as set out in the Revenue manual is to allow people in the OP's situation to settle this ex ante rather than ex post.
 
Calico said:
Maybe I should just change the address for revenue correspondence to property 2?
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This would make no difference to any future test of the substance of which is your PPR.

Tell me seriously though, which property do you spend more time in?
 
NoRegretsCoyote said:
This would make no difference to any future test of the substance of which is your PPR.

Tell me seriously though, which property do you spend more time in?
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It really depends....I would actually say it's close to 50-50....maybe a bit more in Dub as I tend to travel up and down less in the winter.
 
This case study throws some light on my question.....I know it's a UK example, but it's likely Revenue adopt a similar approach.

Also, I should have said that in my case, I bought the second property due to working full time in Dublin.

It is only since Covid and a new remote working policy that I have been able to divide my time between both place.

So probably that makes Dublin my PPR?

Case study

Wayne, an additional rate taxpayer, acquired a home in 2009 in which he lived full-time. In 2013 he bought a second home and divided his time between the two properties.
  • Either property may qualify for the exemption as Wayne spends time at each - ie they both count as 'residences'.
  • Choosing which property should benefit is not always easy since it depends on which is the more likely to be sold and which is the more likely to show a significant gain. Some crystal ball gazing may be needed!
  • The choice of property needs to be made by election to HMRC within two years of acquiring the second home. Missing this time limit means that HMRC will decide on any future sale which property was, as a question of fact, the main residence.
Wayne elects for the second home to be treated as his main residence for CGT purposes. If say in June 2022 he sells both properties realising a gain of say £100,000 on the first property and £150,000 on the second property.

The gain on the second property is CGT-free because of the election.

Part of the gain on the first property is exempt. Namely that relating to:

  • the four years before the second property was acquired (when the first property was the only residence) and
  • the last nine months of ownership will qualify providing the property has been the main residence at some time.
The overall gain on the first property would be time apportioned between the exempt period and the period remaining chargeable.

Capital gains tax and the family home Ireland : Maneely Mc Cann

www.maneelymccann.ie www.maneelymccann.ie
 
NoRegretsCoyote said:
I take your point, but OP in 20 years time could be left trying in vain to prove a negative. We are talking about a situation where a person splits their time equally between their two dwellings so there will be no better evidence that property 2 is PPR over property 1 in his case. However if it is noted on file from 20 years ago that property 2 is PPR then there is much less potential for debate.

I am speculating here, but I imagine the procedure as set out in the Revenue manual is to allow people in the OP's situation to settle this ex ante rather than ex post.
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That will be the case whether or not a declaration is made now. Meanwhile the danger is that a declaration now could prejudice a future PPR claim by the OP.
 
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