When is an investment property a PPR?

[iano086]

The only property I've got at the moment is my own principal private residence (property A) which I've been looking to upgrade to something larger from.

I've the opportunity to purchase another house (property B) which is similar to mine and which, after doing it up, could be sold on - making me about 80k profit (after subtracting the purchase price and renovation costs). Property B isn't a suitable upgrade for me.


If I sell A before buying B and rent for the few months it takes to upgrade B and then move into B, I can avoid paying Capital Gains Tax completely. I am then free to sell B more or less immediately - there being no minimium period of occcupancy required in regard to it in order for me to enjoy 100% relief from CGT on the sale of what would now be my PPR.

My question is this:

Is it possible to overlap ownership in any degree whilst property B is being made habitable? In other words, can I continue to occupy A whilst B is being done up, then sell A and move into B without incurring CGT on either A or on a subsequent the sale of an occupied B?

Thanks in advance..

 

[Joe_90]

making me about 80k profit..

Famous last words.

The last 12 months of ownership of a PPR is exempt in the case of property A even where not occupied as a PPR.

If you are not living in the second property for a period of time than that property may not qualify for PPR relief. Say period of ownership 12 months period of occupation 6 months. Then 1/2 is exempt.

Having posted that it is your intention to purchase and renovate and then sell the property it could be argued that this is a revenue transaction and not subject to CGT.

 

[iano086]

Famous last words.

Certainly, if getting it wrong on CGT. Otherwise it's hardly rocket science.

The last 12 months of ownership of a PPR is exempt in the case of property A even where not occupied as a PPR.

The Revenue's guide to CGT seems to permit this kind of thing as a way of dealing with the fact a person might need to reside abroad on account of their occupation and the like.

I'm not sure I could interpret that as permitting me to occupy B (once renovated and then considering it my PPR) AND retain A for a year without attracting CGT on A.

If you are not living in the second property for a period of time than that property may not qualify for PPR relief. Say period of ownership 12 months period of occupation 6 months. Then 1/2 is exempt.

Would renovating it classify as occupation I wonder? If not then anyone who bought a PPR and had a period of inoccupancy from it, due to renovation prior to moving in to it from their existing home, would be liable for any capital gain. Think of all those Grand Designs and the value added during the period of inoccupancy whilst living in their other house..

Having posted that it is your intention to purchase and renovate and then sell the property it could be argued that this is a revenue transaction and not subject to CGT.

What's a revenue transaction?

I'm not sure what intent has to do with it, since Revenue can't tell whether a person bought > renovated > occupied > sold a few months later out of prior intent to follow that course or on account of circumstances: like another child or an offer they couldn't refuse.

I've already ascertained from Revenue that there is no minimum duration of occupancy required in order to avoid CGT. And so, leaving aside:

a) questions of whether renovation counts as occupancy

b) (my original question as to) whether overlapping ownership of A and B is possible

.. it appears you can buy and sell (and make profit) to your hearts content without attracting CGT. At least so long as you bunny hop from PPR to PPR.