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We live in NZ but own a house in the UK. We bought it in 2000

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We live in NZ but own a house in the UK. We bought it in 2000 and lived in it as our main residence until 2007. For the last 8.5 years a friend has been living there paying the mortgage for us. We now want to sell it. Will we have to pay capital gains on the profit? Will it make any difference if we live in it again before selling it?
Tracy
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. You should refer to HS283, here and here for information on the main residence and CGT and the treatment of gains made by non-UK residents on UK residential property. With effect from 5 April 2015, gains made by non-UK residents from the disposal of UK residential property are subject to Capital Gains Tax subject to deductions and reliefs. There are three ways the gain can be calculated. For most people who have owned a UK residential property for some time, Method 1 will probably be the most advantageous. When a property which has been the owner's main home is let, letting relief can be claimed and you can see the effect that this can have in Example 9 of HS283. Since there would not appear to have been a letting agreement between you and your friend, I'm not convinced that a claim to letting relief would be accepted by HMRC, especially if you never informed HMRC that a let existed which you are supposed to do even if you made no profit from it. You should calculate the gain using each of the three methods to see which is best for you. As you will be given the last 18 months of ownership as a tax free period, there would appear to be no point to moving back in to the property unless you went to live in New Zealand for work purposes and did not buy a home there. Absence relief allows you to treat your home as your main home even if you are living and working abroad so long as you don't have another home and you reoccupy the UK property before you sell it. Take a look here for more information on that. If you did return to the UK before selling the property and you didn't qualify for absence relief, the April 2015 valuation option would not be available to you as that is purely for non-resident individuals. I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
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Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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