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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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How can I avoid paying tax on a house we have just sold? me,my

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how can I avoid paying tax on a house we have just sold?
me,my sister and her partner brought a house in Jan 2008.we renovated the house and rented it out from oct 2009. none of the rent has been declared. our last tenant left on the 31st jan 2016. we have paid council tax and had our names on utility bills since that date.
we stand to make around £127,000 profit from the sale
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. Given that none of you appeared to have lived in the property, I'm afraid that you won't be able to avoid paying CGT assuming that you sold the house for more than the sum of the purchase price, the costs of purchase and sale and the renovation costs. You will each have a share of the gain of around £42,333 (£127,333 / 3) of which the first £11,100 for each of you will be tax free due to the annual CGT exemption. Therefore, you will each have a net taxable gain of some £31,233. There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will each pay will be dependent on your respective incomes in the tax year you sold the property. Take a look here for information on how to work out your CGT rate. You cannot pay more than 28% in CGT. If you look at HS283, you will see that you only qualify for reliefs if the property was occupied as your main home. There are no other reliefs. Regardless of whether your rental income exceeded the expenses or not, you should each have been disclosing it to HMRC in self-assessment tax returns. I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.
we have paid council tax and we have our names on utility bills at the property. Can we not class this as living there ?
Expert:  TonyTax replied 11 months ago.
You let the property so, by definition, it cannot have been your main home before January 2016. HMRC will almost certainly ask you to prove that you lived in the property if you wish to claim some main residence relief and letting relief. Any deduction you did get would be very small as the reliefs are time based. You cannot write off a taxable gain entirely by claiming to have lived there for a few months. Example 9 in HS283 demonstrates that.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15841
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer: replied 11 months ago.
ok thanks for your advise

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