CGT on occasional second home.?

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    CGT on occasional second home.?

    I own two properties and am considering selling one of them next year and have some clarifications about CGT that are confusing me!

    Property A, I have owned since 2000, and lived in until 2010, since when it has been rented out.
    Property B, I bought in 2007, lived in until 2010, since when it has also been rented out.

    I am considering selling Property B.

    - I would probably sell next April - would it be worth me moving back in for 1 year to get the CGT benefit of having lived there?
    - For the 2007-2010 period I lived between both properties, I never made a formal PPR nominatin (had never heard of it at the time), but I spent more than 50% of my time in Property B (was on electotral roll, bills in my name etc.) - can I get PPR relief for this period or is it more complex?
    - If I *can*, is it still worth me moving back in for the final year, or do I get the 'final 18 months' relief anyway because I had lived there in 2007-10?
    - How on earth does "lettings relief" work - the pages on .GOV.UK just gave be a headache! :-)
    - Could I be shooting myself in the foot saving CGT on Property B (value ~£500k) if this means I end up paying more on Property A (~£1m) if I sell this in a few years time?


    Thanks :-)

    #2
    I think you lived in Property A from 2000 to 2007, Property B, from 2007 to 2010 and now you live wherever you live. You'd need the actual dates because the periods are apportioned pro rata.

    You would get the 18 month's allowance on both properties because you lived in both of them (at separate times - your "main" residence can only be one property at any one time - and in the absence of a formal declaration, it's based on the facts).

    You calculate letting relief when you know the taxable gain and the amount you are claiming as Private Residence Relief.
    Then it's the lowest of three figures: £40,000, the taxable gain or the Private Residence Relief.

    You can only claim the reliefs in a way that you can support - if you were on the electoral roll at property B, that's almost certainly where you resided at that time.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      You can only claim PPR exemption to cgt on ONE property at any one time. So like jpk, I believe your main residence during 2000-2007 was property A and during 2007-2010 was property B.

      If you sell property B in April 2018, you can probably claim 3 years + 18 months ( = 4.5 years ) for "main residence" out of 12 years ownership . If your capital gain over 12 years is £150K , then your capital gain during letting period will be 7.5 /12 x £150K = £93K approx. You should be able to claim £40K letting relief + £ 11K personal allowance leaving £42K which is taxable at 28% = £11,750 tax.

      If you sell property A in April 2018, you can probably claim 7 years + 18 months ( 8.5 years ) for "main residence" out of 19 years ownership.
      If your capital gain over 19 years is £600K, then your capital gain during the letting period will be 8.5 /19 x £600K = £300K approx. You should be able to claim £40K letting relief + £11K personal allowance leaving £249K which is taxable at 28% = ££69,720 tax.

      Shooting yourself in the foot ? I don't think so . Sell property A if you worry about your foot.

      But seek advice from a tax accountant before you act.

      Comment

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