The 2 Year Rule

When you sell a property you’ve “lived in” the whole time, you don’t normally expect to pay tax when you sell it, do you? Typically nowadays you can make a gain and most people know that it’s not taxable. But what if you don’t actually move in straight away? This may happen if you are living somewhere else in a home you can’t yet sell or you’re carrying out major work on the new home so you can’t live there, or your new home is yet to be finished on the build. At the moment with these three examples you are probably covered for up to one year from date of purchase, possibly even longer in special cases. Unfortunately however a taxpayer recently wasn’t granted this concession when they exceeded a period of two years. But, bizarrely, another taxpayer was granted this concession – when they also exceeded two years. A concession isn’t law and we are at the mercy of HMRC discretion unless the courts can step in and say otherwise.

But there is clarity now on its way…

For properties sold after 5 April 2020, the law will allow for a delay of up to 24 months before moving into the property, but if that 24-month period is breached none of the initial ownership period will qualify for PPR. So, typically, when a concession becomes law, it becomes all or nothing. This is another good reason why you should take advice before selling a home, if you didn’t move in straight away. We’ve already blogged that from 6 April 2020 if you make a taxable gain on residential property, you will only have 30 days after completion, to make a return and pay the tax. If you owed tax on selling your home, because of this new law, it looks as though you’ll have only 30 days to pay.