PPR and CGT

[midnite]

Hi all,

I thought that I understood this but having read something i wanted to clarify a few points.

My situation is that I'm moving to a new house. My existing house I am remortgaging and letting. I have owned and lived in this property for 17 years.

When I move I understand that I should write to the tax office within 2 years and state that my new property is now my PPR and that my old property is now a let property and I owned and lived in it for 17 years etc.

My understanding was that when I came to sell my original property as long as I done this within 17 years + 3 years for the final letting relief I would pay no CGT whatsoever i.e. if I sold the property within 20 years it would be free from CGT.

However I'm now not quite sure that this is correct and I still in fact could possibly be liable for CGT for any gains made after I have remortgaged.

Some advice here would be appreciated.

Thanks

[TaxationPete]

Your PPR is a matter of fact. if you move to a new house and settle in then that is your new PPR. The old house will attact 36 months of CG exemption, Read HS283 on the HMRC web site then Letting Relief will kick in to futher offset against CG. This could keep the property free of cgt for 5, 6, 7 or more years all depending on what house prices do. You should right to HMRC to tell them you are commencing a rental business. I assume you are the sole owner of the property, are you married by any chance. CGT has nothing to do with your mortgage. The inerest on the mortgage is deductible from the gross rental income. Do you have permission form the mortgage provider to change the use of the property to a rental unit. Regards Peter

[midnite]

Hi Pete

Yes I am married and the property is in joint names, we are both higher rate tax payers.

I have remortgaged on a let to buy basis so yes the mortgage company are fully aware of this.

For the property I have put together a P&L and will of course offset any taxable expenses from the income.

I'll have a read of HS283

Cheers

Tom

[TaxationPete]

So you will be declaring the property income 50/50 by default. This can be altered but if you are both higher rate tax payers there is no point at this stage. As you both own the property then you will be granted two sets of CG Allowance of £10,100 each and two sets of Letting Relief of up to a maximum of £40,000 each, so there will not be a CG Liability for a long time 8 or 9 years even depending on house prices in the future. Regards Peter

[midnite]

Cheers for the advice