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TonyTax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi Tony Tax I moved out and let my flat in March this year

Resolved Question:

Hi Tony Tax
I moved out and let my flat in March this year and rented a house with my girlfriend. The flat had been my primary residence since 2002. I am thinking of buying a house with my girlfriend but will need the equity from my flat to do so. I am concerned that I may have CGT liability but want to know if the flat can still qualify as my private residence despite the fact I have let it out. Also are their any time deadline I need to be aware of to avoid CGT?
Many thanks
J.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

If you still own the flat after buying another property, you will have two years from that point to make an election for one of the properties to be treated as your main residence though, in your case, it would be ineffective since the flat is not available for your use, what with it being let.

When calculating the taxable gain on the disposal of a property, the gain is deemed to have accrued evenly over the entire period of ownership. That part of the gain covered by your occupation of the property as your main home will be exempt from Capital Gains Tax as will the gain for a maximum of the last 18 months of ownership if you were not living there. So, if you sell your flat within 18 months of moving out, you will have no CGT to pay.

Even if didn't sell the flat for 36 months after you moved out, only 18 months worth of the whole gain would potentially be taxable. However, as you have both lived in and let your flat, you would qualify for a further deduction from the gain called letting relief which you can read about here.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15755
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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