Developing a property to live in and selling the current one

Question What are the tax implications of buying a second property to develop as our main home whilst remaining in our first property while the work is carried out (which could take up to two years)? The first property would then be sold. It has been our only home for over 30 years. Only one property would be occupied at a time.
 
 
Arthur Weller replies: 
There will be no capital gains tax (CGT) on the sale of the first property, because if the gap between moving out and selling it (exchange of contracts) is nine months or less (when the sale is after 5 April 2020) the capital gain is covered by principal private residence (PPR) relief. However, you may have a problem if you want to eventually sell the second property after living in it as your principal private residence (PPR) for some time. If the time it took you to develop it would be 12 months or less, those 12 months would also be covered by PPR relief - see HMRC’s Capital Gains manual at CG65003. But when this period is longer, so that the time between buying it and moving in is between 12 and 24 months, it is up to HMRC’s discretion whether to allow PPR relief for this period. If HMRC accept that there were 'good reasons for exceptional delay', PPR relief is available for this initial period (see CG65009).