Returning to a house I used to live in but rented out for some years, then selling it

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    Returning to a house I used to live in but rented out for some years, then selling it

    Hi All:

    The scenario:

    I have lived in my house in London for 10 years and made a large capital gain.
    I want to rent it out while I move to the country for 10 years to educate my children.
    I will buy a house outside London and live in it for 10 years.
    I will rent out London house for 10 years.
    I will then sell up in the country and retire to live in my house in London.

    Questions:

    As I understand it I would not pay any CGT on my house in the country when sold as I would have lived in it 100% of the time. Yes?
    After returning to my house in London and living there for say 5 years then selling it, would I still have to pay CGT?
    If so having owed the property for 25 years in total and lived there for 15, would CGT = tax rate * ((17.5/25 * gain) - £40k -£11k ) ?

    Thanks

    #2
    You are enquiring about CGT rules operating in 10 years time.

    Nobody knows what they will be.

    Your questions appear to assume you will make money from renting and that prices will go up: Probably, to both, but nobody knows either...

    Your questions could be answered on the basis of today's rules..

    A new chancellor was appointed yesterday: Clearly there are going to be changes over the next 10 years....

    Sounds like a reasonable plan, mind.

    Your first post on landlordzone: If you've not been a landlord before, maybe a course in how to be a landlord from RLA or NLA?
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      Currenntl, if you purchase a secod home you will pay 3x stamp duty on purchase price or if you rent out London home CGT will be payable on sale price from date of first rental. Given current feeling on 2nd homes during a housing shortage, I would not expect property CGT to get easier any time soon. Indeed expect the opposite and a fall in property prices in certain areas. Even prof Tax advisers do not have the crystal balls required.

      Comment


        #4
        Originally posted by funnyfish View Post
        As I understand it I would not pay any CGT on my house in the country when sold as I would have lived in it 100% of the time. Yes?
        After returning to my house in London and living there for say 5 years then selling it, would I still have to pay CGT?
        If so having owed the property for 25 years in total and lived there for 15, would CGT = tax rate * ((17.5/25 * gain) - £40k -£11k ) ?
        Yes (answers assume tax regime as now, because otherwise, who knows?).
        Yes, it's based on the proportion you lived there and the proportion you rented it (currently with an extra 18 months added to the ownership element). There is a separate letting allowance which will further reduce the tax due.
        The tax due (if it were today) would be (total gain - £11k) * (16.5/25) * tax rate then less any letting allowance.
        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


          #5
          Thank you very much for specifically answering my questions (rather than waffling on about something else!!).
          :-)

          Comment


            #6
            If you have owned the property for 25 years and lived there for 15 years, you would claim exemption to capital gains for 15 years + 18 months = 16.5 years.

            So you would be liable for CGT on Total Capital Gain x( 8.5/25 ) and this figure may be further reduced by $40K ( letting relief ) and £11K ( personal allowance )..

            Comment

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            • Caught out by changes to Capital Gains Tax
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            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
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            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
              JP Keates
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              07-12-2021, 18:01 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
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            • Reply to Caught out by changes to Capital Gains Tax
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            • Reply to Caught out by changes to Capital Gains Tax
              by AndrewDod
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              07-12-2021, 15:36 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by AndrewDod
              You are really short on detail:

              Date (year & month) bought in joint names ______ (what % was yours then)
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            • Reply to Caught out by changes to Capital Gains Tax
              by reluctantlandlord1976
              We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
              07-12-2021, 14:53 PM
            • Reply to Caught out by changes to Capital Gains Tax
              by AndrewDod
              Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
              07-12-2021, 14:33 PM
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