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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Have a friend selling a house in the UK. How long can you

Resolved Question:

Have a friend selling a house in the UK.
How long can you prolong sale before you have to pay capital gains?
is there some way to prolong it?
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 expand on your question ..

Is it friend's main residence?
If not, has it ever been used as main residence by friend?
Is the property let?
How long has your friend owned it and lived in it?

Many thanks
Customer: replied 2 years ago.

Sorry, didn't see your answer,

Was main residence for many years, has rented it for almost two yrs and is now selling it to the tenant

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply and for additional information..

Based on what you state, your friend is unlikely to pay any Capital gains tax. My reason for that is

- for all the period the property was main residence, it is covered by private residence relief;
- final 18 months of ownership qualifys for additional relief.

This would take care of the bulk of the gain from sale.

Additionally, as the property was a main residence at some point during ownership, there would be letting relief available to the maximum of £40,000.

More information on all this can be found here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323679/hs283.pdf


There is also gain exempt amount available (current tax year £11,100)

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, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4939
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

My friend not not understand the final 18 months ??

Could you please clarify that

Customer: replied 2 years ago.

I need clarification on the question from last night

He did not understand the comment about the last 18 months

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply...

Your period of ownership begins on the date you first acquired the dwelling house and it ends when you dispose of it. The final 18 months of your period of ownership always qualify for relief, regardless of how you use the property in that time, as long as the dwelling house has been your only or main residence at some point.

This is covered on Pages 3 and 4 of HS283 that I referred to in my last posting.

Example

Bought property in Jan 2006

Moved out of property Dec 2011

Rented for period Jan 2012 to Jun 2015

Sold property end Jun 2015

Period as main residence - Jan 2006 to Dec 2011 = 72 months

Period rented – Jan 2012 to Jun 2015 = 42 months

Period of ownership – Jan 2006 to Jun 2015 = 114 months

Private residence relief plus additional relief

(72+18) = 90 months out of 114 month

Gain remaining after private residence relief

24 months out of 114 months

Lets say the gain is £114,000

Private residence relief (90/114) x 114,000 = £90,000

Gain subject to capital gains tax

(114,000-90,000) = £24,000

Letting relief available = £24,000

Net chargeable after letting relief = NIL

I hope this is helpful.
Expert:  taxadvisor.uk replied 2 years ago.
Thank you.

Your reward of a generous bonus is greatly appreciated.

Best wishes.

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