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Sam
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Category: Tax
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SamOn a separate matter, I am thinking of selling my

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Hi Sam On a separate matter, I am thinking of selling my property. I purchased it in March 2008 as my main residence. I rented out the property from September 2009 - June 2012 due to having to move for work (I paid tax on the property income received via tax returns). I moved back into the property in June 2012 to present time and wondered if there would be any CGT issue when I sell because it was let out for a period of time? It was bought as my main residence and I only moved out in between due to having to relocate for work.

Thank you.

Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

I am another expert on this site and I am happy to help you with your question.
Please advise if this is acceptable and I will proceed with the answer.

Many thanks
Customer: replied 2 years ago.

Hi, yes please go ahead.

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

I will revert to you with the calculations shortly.

Many thanks.
Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your patience

Based on information provided by you, the property has been your main residence for 117 out of the 150 months you have owned it.

This period would be covered by private residence relief for CGT purposes.
The period let would allow you another relief i.e. letting relief. This has an upper limit of £40,000.

The period the property was let is 33 out of 150 months i,e some 22%.
Provided the gain after private residence relief does not exceed £40,000 in value all gain would be covered by reliefs and no CGT would be payable on gain from sale of property.

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.

Expert:  Sam replied 2 years ago.
HiMay I ask what led you to move away - as you advise that you left the property for just under 3 years due to work - and it may be that private residence relief continues to be allowable - as you moved away for work purposes and you returned to the property - so please advise whether the work was in the UK, whether you owned any other property during this period of time and how far geographically was this property from the new work base, and whether you choose to take up work away from this properties location or whether an employer asked you to transfer/relocate. ThanksSam
Customer: replied 1 year ago.

Hi Sam

Sorry for the delay, I didn't realise you replied.

I was working for myself (Director of a Ltd company) but things got tough and I took up employment. My partner owns a property in Manchester which was being let but vacant at the time so we moved from London as costs are much cheaper there. We moved back to London after my partner took another job here so we moved back.

Thanks, Mary

Expert:  Sam replied 1 year ago.
Hi Mary
That's not a problem - then you might be interested in the fact you can have an absence up to three years where private residence relief continues to apply.
And as long as your property (that you let out) and your partners property were NOT in joint names during this time - then you will have the WHOLE period of ownership covered by the main Private Residence relief and have NIL capital gains to pay.
Link here this is how your revised capital gain position will be.
http://www.hmrc.gov.uk/manuals/cgmanual/CG65040.htm
You can see that you qualify for the first one
Not exceeding 3 years
TCGA92/S223 (3) (a)
You may allow relief for periods of absence, for any purpose, which do not exceed three years in total, if the conditions set out in CG65046 are fulfilled
The conditions at CG65046 are
CG65046 - Private residence relief: periods of absence: conditions
TCGA92/S223 (7) defines a period of absence as a period during which the individual has no other residence eligible for relief, for the meaning of this phrase see CG65047
There are two further conditions both of which must be fulfilled before a period of absence, defined at CG65030, can qualify for relief by virtue of TCGA92/S223 (3). These are set out at TCGA92/S223 (3A) & (3B).
Condition A
Before the period of absence there must be a time during which the dwelling house was the individual’s only or main residence.
Top of page
Condition B
After the period of absence there must be a time during which the dwelling house is the individual’s only or main residence (if within S223 (3) (a), (b), (c) or (d)), or
The individual was prevented from returning to the dwelling house as a consequence of the individual’s employment requiring them to reside elsewhere or as a condition reasonably imposed to secure the effective performance of the employee (if within S223 (3) (b), (c) or (d)), or
The individual lived with a spouse or civil partner to whom (b) above applied (if within S223 (3) (b), (c) or (d)).
Condition A and Condition B(a) require that both before and after the period of absence there must be a time during which the dwelling house is the individual’s only or main residence. For an explanation of this condition see CG65050.
So you meet Condition A as it HAD been your main residence from the date of purchase to when you moved out in Sept 2009
and you also meet Condition B as less than 3 years lapsed as after a period of absence you DID return to make this your main residence.
So the whole period of ownership is treated as it being your main residence so no capital gains tax arises.
Let me know if you require any further assistance, but in the meantime it would be appreciated if you could rate (or click accept) so Just Answer credit me for my time
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13810
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Thank you so much Sam, I really do value your knowledge and expertise and you provide a fantastic service, you are a cut above the rest on this website and a lot better than my own accountant!

An accountant on this site tried to answer this question when I sent it to you and he did not know or advise about this at all!

I'm sure I will have other questions in the future and will come back to you on the other query on my mother in law.

Thank you again.

Mary

Expert:  Sam replied 1 year ago.
Hi mary
You are very welcome and I am glad you have had a better experience with Just Answer, through my input. In future any questions you ask for Sam - if another expert answers (although out of courtesy they should leave the question for the requested expert - but some do not practice this!) then you can, if you wish, thank them and advise you will wait for as I am online every day without fail.
Thanks and I look forward to the information on your other question, when you have the means to take that forward.
Have a great weekend
Sam

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