Private residence relief - cgt

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Private residence relief - cgt

    I purchased an old dilapidated cottage in Oct 2017 and it was then demolished in May 2018, but I never lived in the cottage. A new house was then built and completed in March 2019 when I then took occupation. I have since met a lovely guy and am going to move in with him next month. I have made about £100k profit from this project and if I sell now I would not pay CGT, as its been my main residence for about a year. However, I am considering renting it out for 18 months and take advantage of the Private Residence Relief, ie I can rent it out for 18 months before I pay any CGT, although I realise there is currently a potential change of law, which may reduce this to 9 months.

    My question is - on the CGT form, the wording is "You have one home and you've lived in it as your main home for all the time you've owned it". But in my case, I have owned the land on which stood the old cottage, but have not lived in it all the time I have owned it, ie it stood empty, then demolished. I assume HMC will not charge me CGT on this period of time, although I was not living there nor was I renting it out, it was just empty????
    Thanks



    #2
    Why would you "not pay CGT" if you have been resident for 1 year of 2.5 years on a £100K profit. That's simply not the case. You had some other residence - PRR is about residence not ownership.

    Arguably since it really is a totally new house some sort of two-period calculation might apply - on the land versus the house. I would definitely discuss this one with HMRC BEFORE selling - as you may want to live there longer to dilute the gain. The issue is whether they will regard the cost of the massive building work as a relief or effectively a sale of a new item to yourself.

    But anyway this is exactly how some developers escape tax while the rest of us pay - building houses, pretending to live there (or actually living there) for some nominal time, and effectively writing all of their business profits (millions) to CG on own homes.

    Comment


      #3
      It's not a potential change in law, the 18 months relief will be 9 months for completions after April 5th.
      Letting relief will only apply to live in landlords from the same date.
      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


        #4
        You can only claim one main residence at any time.
        If you have owned it since Oct 2017 and the old building was replaced by a new building before you moved in , you can claim the period before moving in was for improvement work on your main residence. If you have not claimed main residence at another address, then you should claim it for this current address. As owner occupier and no subletting , you should be able to sell without CGT.
        Don't risk diluting your main residence exemption by renting for 18 months ( PPR relief reduces to 9 months in April ) .

        Comment

        Latest Activity

        Collapse

        • Reply to Will they raise taxes again?
          by JK0
          The EICR's cost around £12k in total....
          27-11-2021, 22:48 PM
        • Will they raise taxes again?
          by JK0
          My accountant just finished my 2020/21 tax return, and my income is half of the previous year. I did not think it would be quite that bad. (Half my tenants moved out, and I had a job to replace them. Plus had to get fourteen EICR's!)

          I'm guessing you guys are in a similar boat. Never mind...
          27-11-2021, 20:20 PM
        • Reply to Will they raise taxes again?
          by Neelix
          14 EICRs isn’t going to dent the income from 14 properties

          its the void periods that cost you...
          27-11-2021, 22:37 PM
        • Reply to Corporation Tax
          by Thurrock1
          jpkeates,

          the other directors can't withhold information from them - I am my husband's agent as he has dyslexia and has difficulty with all this. This has been explained to the director but he does not like me and chooses not to recognise in that case anything I/my husband writes.
          ...
          25-11-2021, 09:39 AM
        • Reply to Corporation Tax
          by jpkeates
          If your husband is a director, the other directors can't withhold information from them; unless there are some very specific rules in the company articles - and they wouldn't normally be appropriate in a property development business (which are usually set up with boilerplate documentation).
          The...
          24-11-2021, 18:36 PM
        • Corporation Tax
          by Thurrock1
          Hi, Please can someone tell me if Corporation Tax only becomes payable to the IR on sale of an asset.
          My husband is a director of a property development company - there are only 3 directors.
          He wants to leave and there is no communication with the other directors and it is difficult to get...
          23-11-2021, 19:15 PM
        • Reply to Corporation Tax
          by theartfullodger
          IR (The Inland Revenue) were dissolved April 2005. Advise against sending them payments....
          24-11-2021, 17:50 PM
        • Reply to Corporation Tax
          by Thurrock1
          Thanks Gordon999. I have been phoning around about this today. This is a property development Ltd co. it had problems and so in 5 years only managed to develop 1 property - a house into flats. My husband owns one third of the company.

          It is not being sold. The other directors need to...
          24-11-2021, 17:47 PM
        • Reply to Corporation Tax
          by Gordon999
          The company pay CT on the "trading profit" reported in the annual accounts.( which are filed annually at Companies House).

          After the asset (the building) has been sold, the trading profit will be reported in the next annual accounts by accountant and CT will be payable to...
          24-11-2021, 11:33 AM
        • Reply to Student HMO and Holiday let
          by Neelix
          In most areas student houses don't pay council tax ....... move in a "non student" and Council tax will apply
          18-11-2021, 07:54 AM
        Working...
        X