ACCA Advanced Taxation (ATX) Practice Exam

What is a requirement for a claim under Private Residence Relief (PRR) if obtaining a second property?

1. File taxes jointly with a partner

2. Must submit confirmation of the new residence

3. Nominate which house is the primary residence within a specified time

4. Reside in the property for a minimum period

The correct answer is: Nominate which house is the primary residence within a specified time

A key requirement for claiming Private Residence Relief (PRR) when obtaining a second property is the need to nominate which property is the primary residence within a specified timeframe. This is essential because PRR is designed to exempt individuals from capital gains tax on the sale of their main home, but it can only apply to one property at a time when multiple residences exist. When someone acquires a second property, they must make an explicit choice as to which property will benefit from PRR. This nomination must generally be made within two years of the acquisition of the second property or provided it meets specific criteria. This timeframe ensures that taxpayers clarify their intentions with respect to their residences, enabling proper application of tax reliefs. The other options do not align with the fundamental criteria required for PRR. For example, filing taxes jointly with a partner does not impact the eligibility for PRR; it concerns the tax filing status rather than the property itself. Submission of confirmation of the new residence is not a formal requirement for claiming PRR and could lead to confusion regarding the process. Likewise, residing in a property for a minimum period is not mandatory under PRR; rather, it is the nomination of the primary residence that is critical. In summary, the nomination of which