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THE EXPERT

A flipping scandal

Phil Spencer looks at the rules and regulations of the second home

As the MPs' expenses and second homes scandal has highlighted, there is nothing wrong in 'flipping' homes and choosing which of your properties - if you have more than one - is your Principal Private Residence. What upset everyone was that MPs claimed up to £24,000 a year to buy, rent or maintain a second home - but when they came to sell it, told the taxman that their second home was their PPR and therefore exempt from Capital Gains Tax.

The tax breaks the MPs exploited can be used by anyone who has a second home. The ability to 'flip' is particularly helpful when combined with 'time to sell' rules. The rules state that you elect which property is your main residence - and there is no CGT to pay on a main residence. However, it is still possible to minimise CGT on selling a second home quite legitimately without upsetting anyone.

On the purchase of a second home you have two years to elect which is your PPR. You don't have to be living in it at the time, but after two years you lose the right of nomination. This can work well for holiday homes that subsequently become full-time retirement properties. Many owner occupiers recently have decided to become landlords, letting out their original home and moving into a new one. If they let their first home for up to three years and then sell, there will be no CGT liability because it had been their PPR within the last three years. It is possible to nominate any property you own as your PPR - provided you do actually live there some of the time, or have lived there within the last three years. So the tax savings can be very advantageous for those buying and selling within this three-year window.

You can also mitigate potential CGT by paying attention to how a property is owned in the first place. If you are buying somewhere that you eventually intend to pass on to your children, it could be worthwhile making them joint owners from the start. Where a couple are not married and both own property, they can each claim their property is their PPR and both will be exempt from CGT on sale. Clearly, CGT is a minefield and you need to take professional advice from accountants - but remember, although MPs were fond of trying this one, you can't charge the cost of the advice against your income tax liability!

For home search services, call 020 8870 6979 or email phil@philspencer.info

IN THE NEWS...

GENESIS OF A SCHEME
Genesis Housing Group has welcomed residents into 11 new homes in Dowsett Road, Haringey. The site, a former leather tanning factory, fell into a state of disrepair after the previous company moved out and the vacant buildings became the target of anti-social behaviour. "We are very pleased with the result," comments Tracy Williams, deputy director project management and construction at Genesis Housing Group. "Futureform's modular construction method allowed us to build a high quality, affordable housing development on a very tight brownfield site."

INTERNATIONAL ISLINGTON
Durkan Estates reports new homes at its Morton Grand development in Islington have been an international success with eight apartments being sold in the past couple of months to French, Italian and Far Eastern buyers. Featuring a collection of one and two bedroom mezzanine apartments in the former art block and six mews houses in the former language block of the converted 19th century boarding school, Durkan Estates have carefully restored the stunning Victorian building, providing apartments with integrated contemporary kitchens featuring granite and stone worktops and lacquered timber flooring.

SILVER CREST
Crest Nicholson sales advisor, Karen Stockwell, has won a top accolade at leading housebuilder Crest Nicholson's annual Sales Advisor of the Year Awards. Karen was presented with a Silver Award, which recognises her exceptional work at the company's The Academy development in Kilburn. "Customer care is crucial in our business," says Stephen Stone, chief executive of Crest Nicholson, "and even more so in a tough economic climate where customers require more guidance and advice about their purchase than in usual circumstances. We invest heavily in staff training because our research shows that homebuyers attach huge importance to standards of service and expectations are high."

ON THE HORIZONS
Family Mosaic is offering homes for sale from just £54,988 for a 25 per cent share, right on the Hoxton/Islington border. Horizons is a scheme with 62 one, two and three-bedroom apartments located near to Angel, Old Street and Hoxton. This contemporary 12 storey development includes four penthouse suites with panoramic views over London and roof terraces.
To see more, visit www.adventisproperty.co.uk

PROPERTY HOT SPOTS

BARNSBURY STREET, N1
This wider than average mid terrace Georgian townhouse is situated over four storeys. Four double bedrooms, two bathrooms, double reception room, kitchen/breakfast room and a landscaped garden are all on offer, and it's available unfurnished for £1,350 per week.
For more information, call Savills on 020 7354 6717

GRAND UNION WALK, NW1
For £380,000 leasehold, this is a highly individual and stylish one bedroom flat in a 'Nicholas Grimshaw' designed building, offering unique accommodation overlooking the Grand Union Canal. There is a balcony and private parking, and the property is centrally located for all the amenities of Camden.
Call Chesterton Humberts on 020 7267 2053 or visit www.chestertonhumberts.com

MALVERN PLACE, NW6
Malvern Place is a stunning new development of 38 one and two-bedroom apartments, each with its own individual style and character. Designed to maximise living space and natural light, the specification includes quality contemporary kitchen units with granite worktops, energy efficient 'Bosch' appliances, en-suites to master bedrooms and video entry phone system. Other features include designer bathrooms, master bedroom with en-suite and fitted wardrobes, stylish flush white oak veneer doors and allocated parking.
Greene & Co are sole agents selling the development - contact them on 020 7286 8787 or email maidavale@greene.co.uk for further information

THE BISHOPS AVENUE, N2
An outstanding two-bedroom apartment located in an exquisite new development on The Bishops Avenue is available to let through Knight Frank, Hampstead, at an asking price of £2,650 per week. This stunning property has a master bedroom with en-suite bathroom which benefits from twin wash basins, marble topped vanity unit with demisting mirror, walk-in shower, free standing bath and Dornbracht shower head and taps, a second double bedroom with en-suite bathroom finished in limestone, a study, a spacious reception room/dining room with dropped coffered ceilings with remote controlled gas fire, a modern kitchen with Boffi units and Gaggenau appliances, and a private terrace.
Find out more by visiting www.knightfrank.com

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