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Tony Tax
Tony Tax, Tax Consultant
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I bought my rural house in Dec 2005 and lived in it from that

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I bought my rural house in Dec 2005 and lived in it from that date. In Dec 2006 I bought a London flat and from that date divided my time between the two properties. In Nov 2008 I elected for the flat to be my PPR as I expected (correctly as it turns out) that it would increase in value faster than the house.

In Aug 2011 I got married. My wife already owned and lived in her own London flat. I moved into her flat in Aug 2011 and let out my flat from Feb 2012 to Sept 2013. We continue to use her flat and my rural house. I have just (Nov 2013) sold my flat.

We have not yet submitted a joint PPR election (although I now realise we should have done within two years of being married). We are now about to submit a joint election for my wife's flat (where we spend 4-5 days per week) as our joint PPR, with effect from two years prior to the date of our election, as we expect it to rise in value faster than my house.

Can we do this, even though it is more than two years since we married? In respect of the period from Aug 2011 to Nov 2011, can we request that HMRC to use my wife's flat as our PPR based on the facts (ie that that is where we spent most of our time) even though that period cannot now be covered by an election?

I believe the gain on the sale of my flat will be totally tax-free as the last three years of my ownership are tax-free as it was previously my PPR, even though I let it out for part of this period. Do you agree?

Do you have any other comments on our proposed strategy?

Many thanks
Hello, I'm Keith and happy to help you with your question.

You are correct; your gain on your flat should escape Capital Gains Tax (CGT) as it was your sole or main domestic residence. It was let out for too short a period to lose this relief.

Unless you elect otherwise, the Revenue will automatically deem the matrimonial home to be your joint PPR. This could cause problems if both spouses own property and they choose to live in the least valuable one, which you do not. There appears to be no need for you to do anything.
Customer: replied 3 years ago.


Thank you for your reply. I am afraid you have not actually answered my main question, which is whether we can now make a PPR election for my wife’s flat, even though we have been married for more than two years.

I should explain that the reason we wish to make an election now is that although we currently spend more time in my wife’s flat, this will change when we both retire in a few years’ time, following which we probably spend more time in the house. An election will therefore cut out any future debate with HMRC as to where we have spent more time.

Re the sale of my flat, I should clarify that while terms have been agreed, contracts for the sale of my flat will only be exchanged in the next few days – we can therefore choose to time any election to be either now, before the legal sale of my flat, or immediately after contracts have been exchanged, when our relevant property interests will have just changed.

You refer to ‘the matrimonial home’ – as I stated in my original question, ‘we continue to use her flat and my rural house’, so both are matrimonial homes, which in this context is not a useful term.

Also it is not true that (as you say) we have chosen to live in the least valuable property – the house is worth more than the flat, but the flat is increasing in value faster (ie £ pa gain, rather than just %). Eventually the flat may be worth more - but not just yet.

So: can we make an election for my wife’s flat now (and, if so, should we make it either before or after I exchange contracts for the sale of my flat – or indeed both, if the sale would cancel the prior election)?

In respect of the period from Aug 2011 to Nov 2011, can we request that HMRC to use my wife's flat as our PPR based on the facts (ie that that is where we spent most of our time in that period) even though that period cannot now be covered by an election?

I look forward to your response.

I think you are worrying about nothing. HMRC will automatically assume that where you are living with your wife will be your PPR. You don't need to make an election, but by all means do so. I did not suggest that you lived in the least valuable property, I merely passed on the HMRC advice aimed at improper tax avoidance in which, anyway, you are not involved. The final year of ownership is ignored for CGT purposes in any event.
Customer: replied 3 years ago.

I asked my questions very carefully, yet you have twice refused to answer it, so in my view you don't deserve to be paid.


Further you don't seem to read my questions very carefully. To refer to 'where you are living with your wife' is to ignore my statement that the balance of where we live will alter in a few years' time when we retire. Both your answers have begged the question, which is frankly cavalier to the point of unprofessional. Most unimpressed.

I am not a clairvoyant, in a few years time the rules in respect of CGT may well be entirely different. I have opted out of your question.
Customer: replied 3 years ago.

I am asking for advice as to what to do now not later I am not asking you to predict the future. You still haven't read the question properly - very poor indeed.

Customer: replied 3 years ago.
Relist: Answer quality.
Keith simply didn't read the question properly and didn't actually answer the question - twice running! Please can Tony Tax answer instead?

I'm looking at your question now.

Hi again.

Take a look at the notes here and at the HMRC manual starting at CG64510 and ending at CG64545 here.

As far as I'm concerned, the fact that you made a main residence election for the flat you are in the process of selling means that you can vary that election at any time after making it up to two years after selling the flat and make it effective as far back as two years. Given that you moved out of the your flat in August 2011 and you will get the last three years of ownership as a CGT exempt period in any event which itself covers you up to August 2014, you can if you wish vary your original election (but jointly with your wife this time) for her flat to be treated as your main residence as far back as two years from the date that you make the election variation without exposing any of the gain on your flat to CGT so long as it is sold by August 2014.

One of the rules for a main residence election is that you have to spend some time in a property for it to be treated as your main residence. I'm not aware that the fact that your wife has never lived in your flat (my assumption), has no equity interest in it and was never party to the original main residence election restricts your ability to vary the claim now. If it did, many married couples who own their own properties independently would have the same problem.

You want to vary an existing election but that variation will now have to include your wife since a married couple who are living together can only have one main residence between them for tax purposes. It matters not that you own separate properties in my opinion. Given that in the absence of an election, the main residence will be decided on the facts, your wife's flat would almost certainly be treated as your main residence should you not vary the election. You have two years after the flat is sold to make the variation though you would not want to wait that long obviously.

I hope this helps but let me know if you have any further questions.

Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15940
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and other UK Tax Specialists are ready to help you
Customer: replied 3 years ago.



Thank you for your helpful answer. While I have studied at some length the links you kindly provided, these do however throw up other issues which call into question your conclusion, and I would be grateful if you could clarify.


I made an election (Nov 2008) before I was married (Aug 2011). Unfortunately my wife and I failed to make a new election within the first two years of our marriage. CG64525 suggests that we should have made a joint nomination from the date of marriage so that my wife could become party to my nomination. As we didn’t do this, does that mean my election is now invalid (see the last two lines of CG64525)?


If my election were still valid, it would mean my PPR is still my flat, and therefore that my wife’s PPR is also my flat – which would be odd, given that she has never made an election. I conclude that my election must have lapsed on our marriage as we did not make a new joint election within two years. If so, presumably we cannot now vary the election, as it has lapsed.


I therefore conclude further that we can now only make an election when we have a future change in our combination of residences (such as will occur when I exchange contracts for the sale of my flat, expecetd to be later this month). Do you agree with this, or you still think the existing election is valid and therefore can be varied now (before I exchange contracts to sell my flat) – if so, why?


Many thanks

Leave this with me while I re-acquaint myself with the facts and I'll get back to you later.
Hi again.

I stand by my original answer and I'll explain why.

First though, the fact is that you want your wife's flat to be treated as your joint main residence and based on the facts, it is. You each own separate property but only one can be considered as your joint main residence. It is clearly your wife's flat. What I'm getting at is that if you didn't have an election in place at all on your own property, it really wouldn't matter since you are selling it within three years of moving out so all the gain will be CGT exempt. What I'm getting at is that so long as you sell your flat by August 2014, this is all academic because of the final three years of ownership rule.

I refer you to a link I gave you previously, here. You made an election for your flat to be treated as your main residence and the fact that you got married does not make that election expire in my opinion. I've found nothing in the legislation to support the theory that an election made prior to marriage which does not involve both parties to the subsequent marriage expires on marriage . The article I linked you to quotes the actual legislation (Section 222 (5) Taxation of Chargeable Gains Act 1992 as follows:

“So far as it is necessary for the purposes of this section to determine which of 2 or more residences is an individual’s main residence for any period…..the individual may conclude that question by notice to an officer of the Board given within 2 years from the beginning of that period but subject to a right to vary that notice by a further notice to an Officer of the Board as respects any period beginning not earlier than 2 years before the giving of the further notice.”

I've read CG64525 which you linked me to. The circumstances there are different to yours. You don't own property jointly nor does one of you not own a property. So, whilst you and your wife have not made a joint election within two years of getting married, I think you can vary the existing election.
Customer: replied 3 years ago.



Thank you for this robust explanation. I follow all your argument and completely agree that I do not have a CGT problem on the sale of my flat.


The reason for my enquiry in the first place is that I am seeking to optimise the position in relation to my wife's flat by an election going back two years from now. I am afraid I am still puzzled, because If my election is still valid, it would mean my PPR today is still my flat (about to be sold), and therefore that my wife’s PPR today is also my flat (since we have to have the same PPR), even though she has never made an election. [She did live in my flat for about six months in 2008-09, but we were not married then, and she has never owned any part of it, so I doubt this is relevant.]


She bought her flat in 2008 and has lived in it 5 days per week from early 2009 to date. It is her only UK property, which she owns and where she lives, yet if my election is still valid, it follows that her PPR is my flat, not her own, although she has never made an election. Is this logic correct? If it is, either it is a very odd conclusion, or my election must have lapsed.


I look forward to your further comments. I am sorry to drag this out but you can see it is important to whether we now make a new election post the sale of my flat or simply vary the existing one now, before the sale. (If we did vary it before the sale of my flat, would we have to repeat it again after the sale as we would have had a change in our combination of properties?)



I'll get back to you on this as you raise some interesting points. However, I have spoken to a friend who owned his ons property as well as another and he had made the election. His new wife also owned her property and they lived in hers. He varied the existing election which his wife had to sign as well, albeit within two years of the marriage.

The point is as far as I can see it is that once an election is in place, it opens the door to being varied at any time in the future. I don't think your wife's main residence will be your flat by reason of your having an election in place. Even if your election lapsed on marriage, based on the facts your main home has been your wife's flat since 2011.

I will get back to you once I have looked up a few more references and technical sources.
Customer: replied 3 years ago.

Thanks - I look forward to your further thoughts in due course. Meanwhile I note that you don't think that my wife's main residence will be my flat by reason of my having an election in place. If so, we would each have different main residences - which would of course be ideal, but it is a cardinal principle that husband and wife may only have one between them...


I am not worried that the facts don't currently support her flat as our main residence but I do want to put in place an election (or variation) as soon as we are allowed to, as we both plan to retire in the next few years and will then spend more time in the rural house, rather than in the London flat, so the facts will then no longer give us the answer we need.


I cannot see how the election you made which your wife was not party to can be deemed by HMRC to make your flat her PPR. I'm waiting for a few call backs from former colleagues for their views and will post again later today.
Customer: replied 3 years ago.

Hi - I agree, which is why I believe my election must have lapsed. Thanks again.

If that's the case, I cannot find anything in the law that says that is what happens and I can think of several cases I've been involved with where a variation has been made with a new spouse being added later than two years but it would seem to be logical. If it has lapsed, the the facts make your wife's flat the PPR.
Customer: replied 3 years ago.

Many thanks - I look forward to your final view once you have heard back from your former colleagues.

Hi again.

I'm drafting a new response now.

Customer: replied 3 years ago.

Great - I follow all that. It follows that we cannot currently make a new election (my original question) as the two year window starting in Aug 2011 has finished. But will we be able to make an election (thus allowing us later to 'flip' if we so wish) when I sell my flat shortly or does the sale not trigger a new window because the flat is no longer a residence?


I moved into my wife's flat in Aug 2011, as I have said, but the flat remained furnished and fully available for my use as a residence until Feb 2012, when I rented it out. Would HMRC consider that it only ceased as a residence when I rented it out, in which case we could now make an election?

It has always been my understanding that an existing main residence election can be varied at any time whether a new residence is acquired or not and as I said earlier, I've seen elections originally made by a single individual varied after marriage but outside the two year window accepted by HMRC. The tax office acceptance of such a variation doesn't make it right of course. It would appear that an existing election isn't as flexible as I thought and have seen in practice.

However, I've now found CG64495. This says that it is not necessarily when the combination of residences starts that dictates the start of a new two year election window but when the newly acquired residence is first used. Having discussed this with a few former colleagues, we came to the conclusion that an existing election can be used to "flip" between existing residences but when a new one is acquired or disposed of (not necessarily the date of acquisition or sale) a new two year window starts.

In your case, that window started when you moved into your wife's flat in August 2011 and expired in August 2013. Since you have not made a new election or varied the existing one within two years of that date, your main residence will on the face of it be based on the facts, ie where you have lived. This will clearly be your wife's flat from August 2011.

However, when you first let your flat in April 2012, a new combination of residences started (as per CG64495) as that property was no longer available to you as a residence so a new two year window started which doesn't expire until April 2014. So, as far as I can see, you can make a joint election with your wife and have the flat treated as your main residence from November 2011. Such an election would expose about three months of any gain to CGT so you could choose to leave things as they are and not make an election. The article here is quite informative.

Customer: replied 3 years ago.

Thank you - that certainly seems to be the answer ie that letting my flat triggered a new window. We will make an election now on that basis.


Thank you for all your help!

Thanks and good luck.