In Desmond Higgins v HMRC [2017] TC 05724 the period of ownership of an off-plan apartment was found to have started for PRR purposes only once the property was complete. 

Private Residence Relief exempts a gain from Capital Gains Tax (CGT) on the disposal of a property that has been the individual’s only or main residence throughout the period of ownership.

  • The taxpayer paid a deposit on an off-plan purchase in 2004, he exchanged contracts to have the flat constructed and was granted a lease on what was then a shell of a building in 2007.
  • Due to the credit crunch, the property was not habitable until 2010.
  • The taxpayer sold the property and claimed PRR on the gain covering the whole period covered by the purchase contract on the basis that the property was his residence. He owned no other property at the time.

HMRC had argued that PRR should be restricted as the period of ownership began when the initial contract was entered into, which was three years before the apartment could be lived in and the lease contract completed. 

The FTT rejected this, finding that the period of ownership began only when the purchase had been physically and legally completed and the purchaser had a right to occupy.

This case has since been overturned by the Upper Tribunal.

External links

Desmond Higgins v HMRC [2017] TC 05724

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