At present, taxpayers who own more than one property used as residences by them, can make a formal election to determine which of their properties should be considered their private residence for tax purposes.
The election needs to be based on the facts – how has each property been used as a private residence - and HMRC has a right to challenge an election if it looks as if the taxpayer has never really taken up residence in a property and is simply trying to obtain a tax advantage.
HMRC is presently consulting on a range of issues that affect owners of residential property in the UK. One of the changes they have under consideration is to scrap the present right to make an election, and to give HMRC the right to determine private residence status based on “demonstrable” evidence.
If this change is enacted it could take effect from as early as April 2015.
Home owners with more than one property should consider their options now.
