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Principal private residence relief. What are the benefits? Do I qualify?

Principal Private Residence (PPR) is something I get asked about all the time. If a property is your principal private residence, then there are massive tax benefits. But do you qualify for these benefits?

In this article, I explain what a principal private residence is. I then cover a range a scenarios, and explain whether or not they qualify for PPR benefits. These scenarios cover 99% of the situations I’ve encountered over the years.

Principal Private Residence is one factor that affects the tax you pay on your property. I’ve written other guides with important information. This article explains Section 24 Taxes that investors have to pay. This article explain the pros and cons of buying a property inside a limited company.

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If you have a property to sell, contact me on this page. If you want to ask me any questions personally, then I have a business coaching service. The 1st session is 100% free.

Tax Benefits of PPR

Principal Private Residence is a property that you live in as your main home. Because “an Englishman’s home is his castle”, the Government provides large tax benefits for these properties.

  • A lower rate of Stamp Duty (SDLT) is payable
  • You don’t pay Capital Gains Tax when you sell the property


If your home isn’t a PPR, a stamp duty surcharge of 3% of purchase price is payable. If you’re not familiar with these taxes, then read this article 1st. It covers the main property taxes that investors need to pay.

I’m buying a new home. Selling my old home

You do qualify for PPR relief!

If you’re buying a property to live in, then this would probably qualify as a principal private residence. I say probably, because one of the below scenarios needs to be true

  • It’s your 1st property
  • You’re selling the old home that you lived in


Once you buy your new home, you have two years to sell your old home. In this scenario, you don’t need to pay the 3% stamp duty surcharge.

I’m buying a new home. I already have a buy to let

You do qualify for PPR relief!

What if you already have a buy to let property? This property won’t disqualify you from buying a home as a principal private residence. You can buy your new home, and don’t need to pay the 3% stamp duty surcharge. It doesn’t matter if this buy to let property is in a limited company or in your own name.

Buying a new home. Old home is becoming a buy to let

You won’t qualify for PPR relief.

This is a common one. You’re moving out of your flat and into your new house. At the same time, you’re converting your old home into a buy to let. I’m happy for you, but you’ll need to pay the 3% stamp duty surcharge on your new home. Your new property won’t qualify as your principal private residence. To qualify as PPR, you need to sell your old home.

I don’t have a home, but my spouse does

You won’t qualify for PPR relief.

This is another common one. Your spouse already has a property, but you don’t. When you buy your new home, will it qualify as a Principal Private Residence? The answer is no, you need to pay the 3% stamp duty surcharge on the new purchase. HMRC view a couple as one entity (how romantic!). If either of you has a Principal Private Residence, then they take the opinion, that both of you do.

I want to ‘flip’ my principal private residence

You won’t qualify for PPR relief.

If you’re like me (for your sake, I hope you’re not!), you spend a lot of time with other property investors. You’ll come across investors that buy property as their Principal Private Residence. They’ll then refurbish it and sell it on at a profit. The advantage of this is that they won’t pay Capital Gains Tax on their profits. Sounds pretty good right? Unfortunately, this is against the rules.

PPR benefits are designed for people who intend to live in their property. Intention is the key word here. In reality, HMRC can’t look inside your heart and ascertain your intentions. For this reason, there are investors that carry out property flips in this manner. You can probably get away with this a couple of times. However, what about if you buy 5 properties in 3 years and sell them on at a profit? HMRC will come and ask some questions! You won’t convince them that you lived in these homes!

I don’t own my home. I’m purchasing a buy to let

You won’t qualify for PPR relief.

A lot of people think that that your 1st property will qualify for principal private residence relief, even if it’s an investment property. This is not true. Even if you don’t own property, then you still need to pay the 3% stamp duty surcharge on your buy to let purchase. Sorry! It doesn’t matter if this buy to let property is in a limited company or your own name.

Conclusion

The tax benefits with buying a principal private residence are significant. If you plan your affairs right, you can ensure that you qualify for these benefits. If you were confused about how to qualify, I hope I’ve helped!

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