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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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In 2013 we put our house up . We accepted an offer

Resolved Question:

In 2013 we put our house up for sale. We accepted an offer and proceeded to buy our new home using pension funds. Meanwhile our house sale fell through. We are awaiting funds from our house sell to renovate the second property.
Now, we have a further acceptable offer on that first house. Will we have to pay CGT on its sale?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Please clarify for me

- You say you accepted an offer to buy a new house in 2013. Have you made an election on what is your main residence yet as HMRC gives you a period of 2 years after acquistion of a second home.

Was the first property your main residence throughout until 2013?
Is it in joint names?

How long did you own the property -- year of purchase?

Many thanks
Expert:  taxadvisor.uk replied 1 year ago.
Alan, please also advise date you acquired the second property.

Many thanks
Customer: replied 1 year ago.
Second property acquired in December 2013
Expert:  taxadvisor.uk replied 1 year ago.
Alan, thank you for your prompt reply.

Your question is -
Now, we have a further acceptable offer on that first house. Will we have to pay CGT on its sale?

First of all, you have up to Dec 2015 to notify HMRC of your decision on which property is your main residence for CGT purposes. Assuming you elect the second property to be your main residence from date of acquisition.

Now we come to first property and CGT implications on disposal of it..

- period to Dec 2013 would qualify for private residence relief provided it was your only or main residence up to that point;
- there is a further relief to cover last 18 months of ownership whether you lived in the property or not provided it was your main residence at some point during period of ownership;

The above two will cover you upto say Jun 2015.

If you were to sell to sell the property now, all your gain would be covered by relief as aforementioned.

In the event it does not, your have annual gains allowance to use against chargeable gain which would take care of £11,100 per owner..

In my considered view, there would be no CGT payable.

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.

Customer: replied 1 year ago.
My understanding of your reply is that we do not have CGT liability.
Would you advise us to inform HMRC of nominated property?
How is this done?
Expert:  taxadvisor.uk replied 1 year ago.

Alan, thank you for your reply.

You should advise HMRC of your nominated property.

You write to HMRC (retain a copy of this letter) advising you bought a property in Dec 2013 and that it is our main residence from that date for CGT purposes. Provide residential address.

This would enable HMRC to update your records accordingly.

Keep it short and concise.

I hope this is helpful

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4939
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.

Best wishes.

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