Capital Gains Tax question?

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    Capital Gains Tax question?

    Dear Forum,

    I currently live in a rental house but looking at purchasing below market value a property owned by family member.

    If this is my main home, would there be any length of time I would need to live in it, as to not pay CGT.

    Tried searching HMRC and asking Citizenz Advice but get conflicting answers so thought I would ask on here.

    Many thanks.

    #2
    The below market value part affects the tax on your family member, not on you.

    Comment


      #3
      I'm reading this slightly differently. Are you asking whether, once you have bought it at less than market value, there is a minimum period that you have to live there before you yourself can sell it on at a profit and not pay CGT ?

      If so, the answer is no.
      I've copied & pasted the following from the relevant part of HMRC website for you. The bit you need to search for, by the way, is Private Residence Relief.


      If you dispose of:
      • a dwelling house (which can include a house, flat, houseboat or fixed caravan) which is your home
      you will be entitled to full relief 1 where all the following conditions are met:
      • the ‘dwelling house’ has been your ‘only’ or ‘main residence’ throughout your ‘period of ownership’
      If you live in, as your home, 2 or more houses, you can only have 1 main residence at a time for Private Residence Relief. You can nominate which residence is to be treated as your main residence for any period. Your nomination must be made within 2 years of the date you first have a particular combination of residences. If there is a change in your combination of residences, a new 2-year period begins. If you do not make a nomination, the question of which is your main residence will be determined on the facts.

      Your period of ownership begins on the date you first acquired the dwelling house, or on 31 March 1982 if that is later. It ends when you dispose of it. The final 18 months of your period of ownership always qualify for relief, regardless of how you use the property in that time, as long as the dwelling house has been your only or main residence at some point.

      Hope this helps.
      Last edited by __chris__; 16-11-2017, 15:24 PM. Reason: typo.

      Comment


        #4
        Sorry still confused.

        Would I be right in thinking that family member wont have to pay any CGT as the property sold for less than they purchased it.

        But if this becomes my only home and I spend time and money doing repairs to property and have no other interest in any other properties would I be able to sell above what I paid for, without CGT, even if I only own for 6 months.

        Sorry to sound thick but been told must stay in house for 2 years, or so many other variables.

        Thanks

        Comment


          #5
          My understanding is that the family member has to pay CGT based on the open market valuation for the property. Your input cost is then the same figure. However, if you meet the conditions for primary residence, you don't actually pay for gain over the initial valuation. However, wait to see if anyone contradicts this.

          This assumes it was an investment property for the family member.

          https://www.gov.uk/hmrc-internal-man...manual/cg14540
          https://www.gov.uk/hmrc-internal-man...manual/cg14560
          https://www.gov.uk/hmrc-internal-man...manual/cg14542

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