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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have two homes. Should I choose to sell my 'weekend' cottage

Customer Question

I have two homes. Should I choose to sell my 'weekend' cottage may I elect to claim relief from CGT? If I did so, lived in my main home and then decided to sell that one, would I be liable to pay CGT on the second sale I.e. the sale of my 'real' main home?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you tell me when you bought each of the properties please (month and year). Do you work? If so, how far away are each of the properties from where you work?
Customer: replied 2 years ago.

Main home purchased Feb 1999 and weekend cottage August 2011. I am retired.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.

Hi again.

I'm afraid that you have missed out on electing for one or other of your homes to be treated as your main home regardless of which one you spend more time in as such an election needs to be made within two years of the acquisition of a second property as you can read here. As things stand, the issue of which is your main home will be decided on the facts.

The government is planning to withdraw the main residence election with effect from 6 April 2015, though the general election may get in the way of that. If the plan to withdraw the ability to make an election goes through, then the issue of which property is the main residence will be decided on the "demonstrable evidence" of the case. This plan is partly due to non-residents being taxable from 6 April 2015 on gains they make from the sale of UK residential property and partly because the main residence election has been abused in the past.

I hope this clarifies your position but let me know if you have any further questions.

Customer: replied 2 years ago.

That is helpful. Thank you. Does the situation change for my circumstances which are that my wife died in August 2013 and she was a 50% owner? The property only became wholly mine then ie within the last 2 years.

If I can elect the weekend home as my main home and sell without CGT, what happens were I to sell my 'main' home later?

Karel

Expert:  TonyTax replied 2 years ago.
Let me take a look at that and get back to you.
Expert:  TonyTax replied 2 years ago.
Hi again.

I'm afraid that you still won't benefit from a main residence election as you had an interest in two properties, albeit not a 100% interest in both of them, from August 2011 and the two year period for an election started then. Had you not had an interest in one of the properties until your wife died, then it might have been worth considering an election but your base cost would have been the probate value in any event.

For CGT purposes, the cost of the property in which your wife was a 50% owner is half the original purchase price and half the value when your wife died. So, your base cost for CGT purposes has been uplifted.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer: replied 2 years ago.

If the situation changes when the Budget is announced I shall be grateful for your advice.

Many thanks

Karel

Expert:  TonyTax replied 2 years ago.
Thanks.

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