I have been away for approx 11 mths. I left dec last year and he passed away in june this year.it wasnt a formal separation. He became an alcoholicand I was forced to leave but if he got better I would have gonebackbut unfortunately this didnt happen.we had jnt mortgage ie jntly owned. I have rented out property for 12 mths to give me breathing space until I decide w hat to do and this expires sep 14. Iwould hate t o pay cgt when I could have moved back in without taking out a big mortgage on my new home. can this be offset against cgt
Thanks.If you decide to sell the marital home, you have three years to do so from the date that you moved out to do so before you need to concern yourself with CGT. The last three years of ownership of a property which has been your main home is always treated as an exempt period for CGT purposes. Take a look at the HMRC helpsheet HS283 here for more information on the main residence and CGT.I hope this helps but let me know if you have any further questions.
Can u also advise if it would be beneficial tax wise to borrow against the equity in the marital home which im renting out to repay mortgage on my new home. Would I be able then to offset mortgage pmt from rental income
Worth 175k, had outstanding mortgage of 25k but used proceeds of insurance policy ie mortgage cover when my husband died to repay it.,so when I decided to rent rather than live in it or sell I had already repaid mortgage few mths previously
Thanks.When you start letting a property, you are treated as having introduced capital into a letting business equal to the value of the property which you can withdraw at any time. What this means in practice is that if you borrow against a property that you have equity in when it is first let, you can remove that equity in the form of a mortgage for any purpose and claim a deduction for the interest you pay against the rental income.
In your case, you can claim a deduction against the rental income for interest on a mortgage of up to £175,000 in value.Take a look at Example 2 here for a situation similar to yours.
Would you advise me to do this in your opinion or just pay tax on rental income I receive. Its all so confusing. If I need to sell withjn 3 yrs so that I dont have to pay cgt am I best just leaving things as they are and pay tax on rental income