Hi.If the house you live in has been your main home for the entire period of ownership and you sell it within 18 months of moving out (36 months for disposals by 5 April 2014), then any gain you make will not be subject to Capital Gains Tax. What you use the disposal proceeds for has no bearing on your tax situation. Take a look at the HMRC helpsheet HS283 for more information on the main residence and CGT. I hope this helps. Let me know if you have any further questions.
Thank you Tony,
Actually I have been living in the house that I, have inherited for 6 years caring for and helping out my Aunt, the owner.
My house, the one I am selling, was let for that period.
Does this change the situation?
It does change things. Assuming that you lived in the property for the entire period up to the point at which you moved into your Aunt's home, you will get the period of occupation by yourself as a tax free period and a maximum of the last 18 months of ownership as an exempt period. In addition, for the period that the property was let, you will get a further deduction from the gain called letting relief equal to the lesser of:1 £40,000,2 the sum of the gain for the period of your occupation and the gain for the last 18 months of ownership of the property and3 that part of the letting period gain not covered by the last 18 months of ownership of the property.You need to divide the gain from the sale of the property into complete months and then split it into the tax free parts and the taxable parts to arrive at your taxable gain.