uk.finance

On Tue, 25 Sep 2007 07:56:03 -0700,
senditontome@ wrote:
> On 25 Sep, 09:01, JimBob wrote:
>
>>
>> I'm due to retire soon and I could usefully spend productive time
>> living in Property A whilst I upgrade things like the bathroom &
>> kitchen and redecorate etc etc. This could take say 6 to 8 weeks. My
>> wife would not be happy puting up with the discomfort involved so she
>> would opt to stay in property B.
>>
>> By staying there ( possibly with my son) and with all the utility
>> bills in my name etc the question is would that enable me to classify
>> it as my main residence. If it did then it would have the added
>> benefit of establishing it also as my son's PPR. If it's relevant,
>> all the utility bills for property B are in my wifes name.
>
> I have a very similar problem with a second property and I'd love to
> know what views you all have on JimBob's suggestion above.
>
If you've never lived in the house as your PPR then there is a possible
benefit by moving in for a short period. But it will be PPR for BOTH you
and your wife so any gain on what is currently your PPR during that
period will become taxable.

If you've already lived there as your main home then there (almost
certainly) isn't a benefit to moving in again (the OP has pointed out
some complicated rules . expat status that might make a difference)

I don't think PPR applies unless you own the house (so a son moving in
wouldn't help establish PPR or maintain PPR)

You can give any amount to your wife which then enables you to take
advantage of both of your (approx) 9k/year CGT allowance if you want to
gift the property to your son.

If you merely want your son to be able to claim the rent then provided
he owns a percentage of the house (however small) then that isn't a
problem (and the percentage can be small enough that there won't be any
CGT to pay at all unless you've already used up your allowance)

But your son will own that proportion. This may restrict your ability to
raise a mortgage on your remaining share. If your son goes bankrupt his
share will be part of his assets. And your son can potentially give/sell
his share to someone else.[1]

Note that this is a very cheap way of giving your son money because
(assuming he pays tax at a lower rate that you do) he gets the gift at
his tax rate rather than you giving him money that's already been taxed
at your tax rate. So if he's a zero rate taxpayer and you're a 40%
taxpayer and the property brings in 5k/year then he gets 5k but you only
lose 3k of after tax income. On the down side, if the property makes a
loss then that loss will be reported on your sons tax return and future
profits will then be offset against that loss (but won't save any tax
because he isn't paying any).

Tim.

[1] In my case I went to a solicitor to draw up a Declaration of Trust,
and amongst other things, if either party wants to dispose of their
share then they have to give written notice to the other party who then
has the option (with time limits) to buy them out. It also covers how we
arrive at a "fair" valuation if we cannot agree. Obviously, you expect
you will never have a disagreement like this but you might find yourself
arguing with the official receiver, or your son's girlfriend who hates
your guts if your son leaves everything to her and is then killed in a
crash.

--
God said, "div D = rho, div B = 0, curl E = - @B/@t, curl H = J + @D/@t,"
and there was light.

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