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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15914
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Apart from our main home, my husband and I have 2 properties

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Apart from our main home, my husband and I have 2 properties which have been student lets. We are thinking of selling these 2 properties and would like to reduce our capital gains tax liability. The properties were bought for £78000 and £88000 in 1998 and 1999. and are valued now at approx. £235000 each. Could we nominate one of these as our principal private residence before selling and live there for 6 months? Would this reduce our liability and by how much? Is there anything further we could do?
I'd appreciate your advice
Regards
Elizabeth
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Leave this with me while I draft my answer.
Expert:  TonyTax replied 1 year ago.
If either or both of the properties was your main residence at some point during your ownership, you will qualify for main residence relief for the period that you lived in it and for the last 18 months of ownership regardless.
If one or both was was your main home, you will also qualify for letting relief for the period they were let privately which could reduce the taxable gain by up to £40,000 per part-owner. See example 9 of HS283 (link at the bottom of the answer).
If neither property has ever been your main home, then in order to get some main residence relief and letting relief, you would need to live in either one for a period. I would say that you would need to need to live in each one for at least a year. Even if you do that, HMRC may deny you main residence and letting relief on the basis that you moved in simply to get the tax reliefs and not to make either property your home. They are looking at such claims with a critical eye increasingly with a view to disallowing spurious claims.
Even if you moved into one or both of the properties at different times, you may not wipe out all of the gains.
Take a look at HS283 for more information on the main residence and CGT. See example 9.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief
I hope this helps but let me know if you have any further questions.
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