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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 bought a second property back in 2008 which had planning

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Hi. I bought a second property back in 2008 which had planning permission to extend & renovate with the view to live in once the work was finished. We moved into the property in 2008, rented out our main residence & continued the work on the second property until 2011 once the work was finished. My family decided that they didn,t want to live at the second property so we moved back. We have rented out the second property since then but have decided we would now like to sell it. The second property is in joint names, i.e my wife & myself which I know means we both have a capital gains tax relief of roughly £10k each. Are there any other tax relief that we could claim for? I have read there is a relief for letting a property. Also would it qualify as our principal residence seeing as we lived at the property for over two years & our mail etc was sent there?
I look forward to your response.
Kind regards, Marc
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

Given that you let your first property, the second property became your main home by default.

You should qualify for relief from CGT for the period that you lived in the property and for the last 18 months of ownership (36 months for disposals by 5 April 2014-see here). In addition, as it was both your main home at some point and it has been let, you will be entitled to letting relief which will be the lesser of:

1 £40,000,

2 the sum of the gain for the period that you lived in the property and the gain for the last 18 months of ownership and

3 that part of the letting period gain not covered by the last 18 months of ownership.

Take a look at HS283 here for more information and examples on disposal of the main home and CGT.

I hope this helps but let me know if you have any further questions.

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