Tax reductions for owners of 2 residences!
If you own two or more properties, which you occupy as your residence from time to time, only one can be nominated as your principal private residence. Usually your principal private residence is the property where you spend most of your time.
When you sell your principal residence any gain is potentially free of capital gains tax (unless you have let the property at any time during your ownership, or otherwise not occupied it.).
If you also own a second residence any gain on the sale of this property will be a fully taxed capital gain.
However there is a way that you can legitimately use the election to treat ANY residence that you own as your principal private residence, to good effect. To be effective the very first election must be made within 2 years of the purchase of that property.
The Inland Revenue have an interesting example of the advantages you can secure by employing this strategy. On their web site they describe the example of a couple sacrificing just 1 weeks ownership of their main property as their principal private residence, to secure 3 years relief from capital gains tax on their second residence.
To take advantage of this type of planning you will probably need to demonstrate a continuing occupation of the second residence - there is no minimum time set out in law, but at least three months would be advisable.
The key in the planning is to submit and revoke tax elections in a timely and proper format. If the circumstances fit please call if you would like us to consider a possible use of this strategy.