In the latest private residence relief (PRR) case of Gary Ives -v- HMRC the taxpayer renovated and sold three properties in five years, but the First Tier Tribunal found that he was not carrying on a trade and Private Residence Relief applied in full to the gains.
The various properties were acquired with a view to being nearer to family and the taxpayer lived in all the properties while they were being renovated and his wife moved in when they were habitable. There were numerous third party witness statements supporting the taxpayers argument of the reasoning behind the purchase and sale of the properties and the nature of the occupation.
The Tribunal considered the badges of trade to determine whether the activities were trading in nature and although many of the badges indicated trading when viewed in isolation they accepted that on the evidence provided it appeared all three properties were enjoyed as family homes with the intention of it being permanently and the Tribunal found that on the balance of probabilities the houses were held as long term investments and the transactions were not trading in nature.
This case demonstrates that keeping appropriate evidence and a record of the facts is important where a property is purchased and renovated with a genuine intention to use it as the family home and not with a profit motive in mind.
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