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In May 2005, my wife and I bought a house in Scotland. We included our three sons in the deeds, thus gifting three fifths of the value to them in the hope that we live a further seven years.
We now want to use this purchase to "trigger" the nomination of our family home as our Principal Private Residence (PPR), so that we can vary the nomination in future if we decide to sell our holiday home in Spain or our London flat.
Is our diluted (two-fifths) ownership of the new Scottish property likely to prejudice our using it as the trigger to commence PPR nomination? If so, should we change the ownership to my wife and me only. If we did so, there would be a small capital gain, but not enough, when divided by five, to exceed any of our limits.
Maggie Fleming writes:
If you have not previously nominated one of your existing properties as your PPR, you have two years from the date on which you first started to use the Scottish property as a residence in which to make a written election to HM Revenue & Customs. The election does not have to be in favour of the Scottish property itself - it is, as you note, simply the "trigger". It can also be varied at any time. But do not forget the basic point: in order for any property to be nominated as PPR, it must actually be a residence - you must live there from time to time.
The fact that your children have an interest in the property is not, of itself, relevant. However, there is a rather large can of worms connected with gifts of residences to children. If you were to live in the property without paying your sons a commercial rent for the use of their part of the property, your original gift would not be effective for Inheritance Tax (IHT), as it would be a gift with reservation of benefit. If your children also live in the property, however, it would be possible to avoid this by means of a sharing agreement, where everyone pays their own share of running costs.
I suggest that you take professional advice before going further.
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Isis' 
