• Home
  • Latest
  • PPR: Limited relief for off-plan purchasers

PPR: Limited relief for off-plan purchasers

Posted on 27 February 2019

PPR: Limited relief for off-plan purchasers

Principal Private Residence Relief (PPR) can provide full exemption from CGT for homeowners disposing of a property that has been their main residence throughout their "period of ownership". PPR is proportionately reduced to the extent the property was not used as their main residence during this time. The interpretation of "period of ownership" therefore directly impacts the amount of PPR homeowners can claim on their gain. In Higgins [2018] UKUT 0280, the Upper Tribunal held that a homeowner's period of ownership began on exchange of contracts, rather than upon legal completion. Whilst the ruling has instant ramifications for off-plan buyers, it may also in future affect other buyers looking to take advantage of PPR.

Mr. Higgins bought an off-plan apartment in the St Pancras Station Hotel development, signing an unconditional purchase contract in 2006. Once built, he completed the purchase in 2010 and occupied the property as his main residence until he sold it in 2011, claiming 100% PPR. HMRC disagreed and, on appeal from the FTT, successfully persuaded the Upper Tribunal that his period of ownership began when the off-plan contract was signed (so from 2006 to 2011, rather than from 2010 to 2011). As such, Mr. Higgins could only claim PPR in proportion to his one year of occupation (and the last 18 months, which is automatically exempt) across his five year "period of ownership".

Off-plan buyers, unable to use the property as their main residence during its construction, can now only claim PPR on part of their gain. Under this principle, buyers intending to claim the relief may also be stung if they are not able to move in between exchange of contracts and completion. Homeowners should be aware that although HMRC does not widely take this position at present, there is nothing stopping them from doing so in the future.

How can we help you?

How can we help you?

Subscribe: I'd like to keep in touch

If your enquiry is urgent please call +44 20 3321 7000

Crisis Hotline

Emergency number:

I'm a client

Please enter your first name
Please enter your last name
Please enter your enquiry
Please enter a value

I'm looking for advice

Please enter your first name
Please enter your last name
Please enter your enquiry
Please select a department
Please select a contact method

Something else

Please enter your first name
Please enter your last name
Please enter your enquiry
Please select your contact method of choice