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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: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year 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 1 year ago.

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

Expert:  bigduckontax replied 1 year 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, Accountant
Category: Tax
Satisfied Customers: 3117
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year 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.

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