Can I change my ‘intention’ to help reduce my property tax bill?
What would the tax treatment be if I were to buy a house with a view to doing it up and selling it for a profit, but then change my mind and decide that I would like to live their as my main residence. Would I, after 1,2 or 3 years time when I sell the property still have to pay tax as a developer or would I be allowed to claim PPR? I only ask this because of the initial intent and the intent is one of the ways the I.R. use to determine which category you fall into.
ICTA 1988 sec 776 says that if property is acquired with the intention of selling on at a profit, then that profit shall be subject to income tax, i.e. without the benefits of capital gains tax reliefs. Paragraph 9 there says that this does not apply to a situation where it was the individual's private residence.
However it refers you to TCGA 1992 sec 224 paragraph 3, where it says that if the acquisition was for the purpose of realising a gain, then principal private residence relief shall not apply.
This is not a clear cut matter. However if there was a genuine change of mind it is quite possible that the Inspector would accept that principal private residence relief should apply.
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