How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3811
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

Sam, I am Ervin I would like advice with regard to property taxation I've

Customer Question

Hello Sam, I am Ervin
I would like advice with regard to property taxation
I've been living in my current property for 10 years; I exchanged contracts on a new property but this purchase is not dependent on selling my current property.
I have a completion date of 30 April 2015.
I wonder how long can I keep my current property if I wanted to avoid issues with capital gains tax?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello Ervin, I'm Keith and happy to help you with your question.

For the last 18 months of ownership you are deemed to be in occupation even if this is not the case. For this period Private Residence Relief, which absorbs 100% on any gain on your sole or main domestic residence, is extended. In theory this would give you until 30 October 2016, but I would be inclined to only let the 18 months to run from the date of exchange of contracts to be on the safe side. This should give you ample time to dispose of your present property.

I do hope I have helped set your mind at rest upon this matter.

Customer: replied 2 years ago.

Sorry, but I don't understand what you are saying.

Expert:  bigduckontax replied 2 years ago.
If a property is your sole or main domestic residence you are entitled to Private Residence Relief (PRR) when you sell it. Any gain you make on sale is subject to Capital Gains Tax (CGT), but the PRR relieves you of 100% of any gain so there is no CGT to pay.
Everyone knows that you cannot dispose of a house as quickly as you can say a car. It is for this reason that for the last 18 months of ownership you are assumed to be in residence even if this is not the case. Your entitlement to PRR is thus extended by 18 months within which time any gain will still be entitled to PRR and not be subject to CGT.
I do hope that helps.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Please don't hesitate to ask any other follow up questions if there is something you do not understand. Most people do not realise that whenever they sell landed property CGT applies to any gain made, but for the vast majority PRR applies so there is no tax to pay.

Related Tax Questions