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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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hi there, I would like some tax advice re capital gains on

Customer Question

hi there, I would like some tax advice re capital gains on property I rent out .I own 3 properties a flat in London which I have rented out for a long time 10+ years which I am debating taking back as a principle residence (its currently let but I am looking at the best tax advantages), a house in Wales (currently main residence) which I am debating selling or renting and a house in Wales I let. Can you advise on renting out and tax implications and capital gains?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

With the properties that already have a period of time for which they have been rented out - there is no changing the fact that capital gains will arise, and its unlikely it will lessen the charge either, as the time has been set in stone, in view of the capital gain and period of time that capital gain arises for.

If the property in Wales has been your main residence since ownership, then if you sell this within 18 months of moving out, then it will remain free of capital gains, as the tine you lived there, plus the last 18 months of ownership are exempt from capital gains under the private residence relief rules.

The flat in London, for which you are considering making your main residence, will always have the 10+ years when it was not your main residence (you do indicate that this ever was a main residence but if this is the case, then you will already have some further period of ownership that will be exempt)

On the basis of what you advise 10 years+/total period of ownership will always be the calculation applied against any gain made, at a future sale date. (plus any future absences when this is not your main residence)
On the plus side, however you will also be considered for private lettings relief, which can allow up to a maximum of £40,000 further gain being exempt.

The other property in Wales would at this time not attract any exemption from the gain, as it would appear it has always been let out.

Let me know if you wish any clarification on the above.

Thanks

Sam



Customer: replied 2 years ago.

hi I have further questions on whether I should sell primary residence now I have started a role as a contractor, part time, I am living with my new partner in his house and paying rent and renting out my primary residence or selling . Then if tax efficient, taking my flat back as a primary residence . I would like to know what is the most tax efficient way of managing daily rate salary and rental income. Any further advice. Also can I offset rent against employment expenses and what else can I claim?

Expert:  Sam replied 2 years ago.
Hi


Thanks for your response

We are tax advisers not financial advisers - so whether you choose to sell your current primary residence now or later, or rent it out has to be up to you - along with discussions with a financial adviser.

I have advised the tax position on each property for capital gain purposes and all rental income should be declared to HMRC (which I assume you are doing already) but any time that exceeds 18 months out of a property that has been your main residence, will always attract capital gains, and how this compares with profits you make from rental income v profits made when a property is sold is impossible to project - as the market value of property both increases and decreases.

Within that, you also need to consider what your short and long term financial needs are - so I am sure you can appreciate, tax experts advise on the tax position - and we are not experts in the route you should take with your financial assets.

Im not sure what you mean by daily rate salary ? And questions regarding your part time work as a contractor will need to be listed as a new question as this was not asked for in your original post, and as per Just Answer policy - your fee you offer for the question relates to that topic only, and you are asking far more than your original question suggested. So this should be listed as new topic.

Thanks

Sam




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