Friday 14th August 2009 Blog

Flipping Houses

If your clients own and occupy more than one property as their home they can elect, within a set time period, for one of those properties to be their main home for tax purposes. Your client can change this election at any time so another property qualifies as their main home, hence the term 'flipping'. When they sell their main home the increase in value that has built up while it was their main home, and for the last three years of ownership, is free of capital gains tax.

Three years of the ownership period will be free of tax, even if the property has only been designated as your clients main home for a very short period, perhaps only a week. This is the tax rule many MPs used to avoid paying tax on the home that had been largely funded by their expense claims.

Your client can flip their properties just like an MP, if they make the first election within two years of acquiring another residence, or within two years of marrying (or civil partnership). If they have missed this deadline on their current properties it may be worth acquiring a very small third property to give them the option to make the election again.

However, beware that the law in this area could be changed with little advance notice following the MP's scandal.

Posted by: Bookcert Mentoring Team

Friday 14th August 2009

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