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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13997
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am in the process of working out my tax implications

Resolved Question:

Hello. I am in the process of working out my tax implications on a property to which I have let out for a duration, but one which we hope to move in to to use as our home for the foreseeable future. What I do not understand is how the tax office understand this detail? Ie what do they look at to ensure that we do live at the property and will do for the next 3 years for example, so that we are not hit with a high capital gains tax bill?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question
Usually the electoral roll is the first port of call, along with what bills you have - so they look for evidence that you conduct all aspects of your life (mobile phone bills, internet/TV/Telephone bills, council tax etc
Then whether you had other aspects of you life as being based here - so doctors, dentists, work, bank etc
That all your tax records, National insurance records etc are changed to this address
That any other property you may remain owning is let out to tenants or sold.
They would be the main markers HMRC would look to to establish a genuine change of residence, that was to be considered the main residence.
But I should advise that you moving in does not change the capital gain situation that much- it will allow a consideration for private residence relief for that duration, and then subsequently allow a consideration fro private lettings relief (which can allow up to £40,000 more relief) but the period of time already created when it was NOT your main residence still exists and its on the basis the capital gain would arose. So do weigh up this situation carefully.
let me know if you wish any clarification on the information provided.
Thanks
Sam
Customer: replied 2 years ago.

Thanks so much Sam, that is incredibly useful information.

Expert:  Sam replied 2 years ago.
Hi
You are very welcome
Let me know if you require any further assistance - but it would be appreciated if you could rate the level of service I have provided (or click accept) as this ensures that Just Answer credit me for my time
Thanks
Sam
Customer: replied 2 years ago.

Just one last question, what about the details of the mortgage for example? Is this looked into in any way, ie the charge on the mortgage and whether a residential mortgage is set in place on that property?

Expert:  Sam replied 2 years ago.
Hi
Thanks for your further question
Not as such - although if there was no evidence of this being the main residence and it had a buy to let mortgage on it, then certainly it would contribute to HMRC arguing the fact this could not possibly be a main residence.
But in itself - its feasible you would have started out with a buy to let, and may have no reason to change this over, as long as the bank.building society with whom you took out the loan are happy with the change of use of residence then HMRC are not going to take issue with this.
Thanks
Sam
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Customer: replied 2 years ago.

Thank you Sam for the information.

Expert:  Sam replied 2 years ago.
You are very welcome
Thanks
Sam