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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4983
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am a lifelong UK resident and taxpayer. I have sold my

Resolved Question:

I am a lifelong UK resident and taxpayer.
I have sold my main home. Completion was on 30th January this year.
I then moved into another property that I have owned since Feb 2010. It is now the only property that I own. Between Feb 2010 and Jan 2013 my daughter lived in this property, she did not pay rent but did pay all the bills including council tax. This property has never been rented out.
This property is now my only home but what happens regarding Capital Gains Tax if I sell this property in the next few months?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Please clarify -
You say you bought this property in Feb 2010 and it was your second home until Jan 2013.
What happened to the property between Feb 2013 to Jan 2015 .. was it left empty or did you move into it?

Did you move into this property this month and made it your main residence?

Many thanks

Customer: replied 2 years ago.

It was left empty, apart from infrequent overnight stays, until I moved in full time this month and it became my main residence.

Expert:  taxadvisor.uk replied 2 years ago.
Les, thank you for your prompt reply.

I will revert to you with my answer to your question "This property is now my only home but what happens regarding Capital Gains Tax if I sell this property in the next few months?" shortly.

Many thanks
Expert:  taxadvisor.uk replied 2 years ago.

Les, thank you for your patience.

If you live in more than one property you can tell HMRC which one you want to be treated as your main home, or 'principal residence', for Capital Gains Tax purposes. You do have to reside in, not just own, the property to nominate it as your main home.

You have to make the nomination within two years of changing the number of properties you live in, whether the change is an increase in the number of homes or a decrease.

Based on what you have stated, it appears you did not nominate this property as your main residence within the permitted time scale.

So this property becomes your only and main residence from Feb 2015.

Generally, if you have lived in your home and it has been your only home all the time that you owned it, you will not have to pay Capital Gains Tax on any money you make when you sell it because it will be covered by Private Residence Relief.

Even if you no longer live in your property, you can still qualify for the full amount of Private Residence Relief, provided that:

- the property has been your main home from the time that you bought it

- it has otherwise fully qualified for Private Residence Relief

- you sell it within 18 months of moving out or it no longer being your main home

Now we come to your question "This property is now my only home but what happens regarding Capital Gains Tax if I sell this property in the next few months?"

Consider this scenario as an example...

Date property bought – Feb 2010

Period covered when property let rent free or empty – Feb 2010 to Jan 2015 = 60 months

Period property used as main residence - Feb 2015 to Jan 2016 = 12 months

Bought another property and moved out of this property – Feb 2016

Property sold in Mar 2017

Period post move out – Feb 2016 to Mar 2017 = 14 months

Total period of ownership Feb 2010 to Mar 2017 (60+12+14) = 86 months

Capital gains calculation

Principal private residence relief = 12 months

Additional relief = 14 months

Total relief (12+14) = 26 months

Chargeable gain (86-26) = 60 out of 86 months or 69.8% of the gain.

If you make a gain of £100,000 then £69,800 would be be chargeabl e to CGT.

You would get your gains allowance (currently £11,000) against this gain and the balance would be taxed at 18%, 28% or a combination of both depending on your total taxable income in the year of sale.

Taking my figures as an example, maximum CGT would be (69,800-11,000) £58,800 at 28%

CGT= £16,464

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.