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Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Hi, I have just bought a house (completion in one week) with

Resolved Question:

Hi,
I have just bought a house (completion in one week) with the intention of renting out my current home.
I am now considering selling my current home as it has a large amount of equity in it.

My question is, can I rent it out for a year and then sell it without paying capital gains tax i.e. I keep my full Private Residence Relief.

Thanks
Pete
Submitted: 3 years ago.
Category: Property Law
Expert:  Ash replied 3 years ago.

Alex Watts :

Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.

Alex Watts :

No.

Alex Watts :

You would have to pay some tax on it.

Alex Watts :

You need to have lived in the current home for 3 years.

Alex Watts :

So you would pay 1/3rd Capital Gains Tax for 1 years, less allowances

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

Sorry, I don't think I made myself clear.

Customer:

Sorry I don't think I made myself clear. The house I want to rent out, and then sell a year later, is the house that I have been living in for the last 10 years.

Alex Watts :

Yes.

Alex Watts :

You will still have to pay capital gains tax

Alex Watts :

You can only sell one house without paying tax

Alex Watts :

Here you will own two houses.

Alex Watts :

One for primary residence and one for renting out

Alex Watts :

When you get the second house, your primary residence changes.

Alex Watts :

Then at the old house which you will rent and sell for 1 year, you will still have to pay 2/3rd capital gains because you have not lived in your new house for 3 years.

Alex Watts :

Therefore you will have to pay 33% capital gain

Alex Watts :

This is because you will only have a years relief on the old house

Alex Watts :

Does that clarify matters?

Customer:

Great

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