Flipping Properties As long as the initial election for Principal Private Residence (PPR) relief has been made, it can then be varied (‘flipped’) as many times as desired by submitting a further election. There is no prescribed form or wording for the election but it must be made within two years of a change in ‘combination of residences’. Should the two-year time limit be missed, there needs to be a ‘trigger’ event in order to reset the election date. Examples of ‘trigger’ events that could be used to change the ‘combination of residences’ are: • Marriage/civil partnership – both parties owning property used as their respective residence, or where there is joint ownership. Married couples/civil partners can only have one main residence qualifying for PPR such that any election made must be made jointly. • Renting out one of the properties – when the letting comes to an end the owner can then take up residence. • Selling half of one residence such that the seller is no longer in full ownership but is still in residence. • Transferring ownership of a main residence into a trust under which the owner has a beneficial interest, with the proviso that the owner remains in residence. Care is needed so as not to be caught under the ‘gift with reservation of benefit’ or ‘pre-owned asset’ rules. PPR is a valuable tax relief and ‘flipping’ is legitimate tax planning. However, if used too many times or in quick succession, there is the danger that HMRC will investigate in an attempt to prove that either the PPR exemption is invalid and that the real reason for nominating the properties is avoidance of tax or that the owner should be taxed under the income tax rather than capital gains tax rules as a ‘serial seller’. Example: John’s main residence is in Woking; his father lives in Camberley. John’s father dies and leaves his house to John, who lives in it at weekends. John is unaware of the election required and misses the election date. Three years after his father’s death the election has still not been made. John marries Jane and the property is transferred into joint ownership. Upon marriage the election can be made.