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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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i have just sold a second property which i refurbished but

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i have just sold a second property which i refurbished but did not live in or nominate as my main residence so i know i am liable for approx £12,000 CGT on this however i used the money from that sale to buy a new home which i will move into once that property has been refurbished. I have the option to have a friend live at the new property and pay rent whilst the works are being done and i sell my existing flat so if i do this is there any benefit CGT wise to me? Im thinking along the lines of not being liable for CGT as iv transfered it from one second property to another second property. If this is an option will the original CGT become payable when i move in?
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,
There is a relief on paying capital gains tax if you trade one property for another. All or part of your gain may be postponed if you buy another property or certain other assets for business use.
This is not available for property that is your personal use property unfortunately.
There are requirements though that must be met:
You can claim relief if:
• you are trading
• you are carrying on a business of furnished holiday lettings
• you are occupying commercial woodlands and managing them
commercially to make a profit
• you are carrying on a profession, vocation, office or employment
• you are providing an asset to your personal company, or
• you have disposed of land by a compulsory purchase.
You would not be allowed to use the relief though unless you can show that this was related to business.
HMRC has a helpsheet that explains this relief in detail.
You can use the following url to read the full relief requirements:

http://www.hmrc.gov.uk/helpsheets/hs290.pdf

It does not appear that you would be allowed the relief based on what you have stated thus far.

Customer: replied 2 years ago.


Thanks for the quick response.


 


So just to clarify by using the money made from the first property to buy a BTL investment wouldnt qualify me for this relief. I am PAYE and also currently own 2 other BTLs and i a pay income tax on them via self assesment returns.

Expert:  TaxRobin replied 2 years ago.
Hello,
The property was not used for business so it would not qualify as a reinvestment. If the property had been used then you could reinvest in another. It is something to look to if you do decide to dispose of a BTL that you hold.
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 14435
Experience: International tax
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