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Year End Tax Review 2004

Second Homes

The property market has been rising sharply again in recent years. Gains on your "only or main residence" are not charged to tax (unless you use part of it exclusively for a business purpose), but a second home or an investment property are chargeable.

If you actually use more than one property as a residence, you can choose which one you want to be exempt from CGT. Although this might be the one that you live in most of the time, you are likely to obtain an advantage - and give yourself greater flexibility in the future - if you make an "election" within two years of acquiring the second home. For example, if you decide to sell the second home first, or if the gain on it is larger than the gain on your main home, it might be useful for it to be exempt.