CGT query - moving next doot.

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    CGT query - moving next doot.

    The property nextdoor will soon come on the market and my wife and I are looking into the feasibility of buying it and letting either it, or our current home.

    Having previously let a property (that was initially my residence) and sold it paying no CGT some years ago, I am wondering if this can be repeated now time has moved on and my circumstances have changed.

    Our current property is jointly owned by my wife and I. If we pruchase the house nextdoor and move into it, could we let our current property for a number of years and avoid all CGT on capital gain if we sell?

    #2
    It is not quite correct to say that you will not have any CGT liability because you once occupied the property as your only or main residence and also rented it afterwards.

    As the existing home has been your only or main residence since the date of purchase, all the period of ownership until you move out is fully covered by PPR relief and no CGT is payable for this period. Additionally, you are allowed a further 3 years to do what you like with the property and this 3 year period will also be exempt from CGT. If you let the property and retain it beyond the 3 year period, the gains apportioned to this excess period is chargeable to CGT. However, any such chargeable gains is further reduced by lettings relief of upto £40,000 for each one of you (upto £80,000 for two owners). This relief is equal to your gains covered by PPR relief upto a maximum of 2 x £40,000. If there is still any gains exposed to CGT, you have non-business asset taper relief of 5% after 3 years ownership rising to 40% max for 10 years ownership. Finally, you have the annual exemption for the two of you, currently 2 x £8,500 = £17,000.

    All in all, you have at least 3 years CGT free period. But, depending on how long you have owned and lived in your current property, and assuming that you will let it as residential accommodation, you have a substantially longer period to keep renting and still pay little or no CGT. The final position will depend on how much gains you make and how long you have retained the property before selling it.

    Ramnik
    Private advice is available for a fee by sending a private message.

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