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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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Can we exclude capital gains on a house we used to rent out

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Can we exclude capital gains on a house we used to rent out if we move back in for 6 months?
Submitted: 11 months ago.
Category: Tax
Customer: replied 11 months ago.
We bought the property in 1994 as our family home. We lived in it until 2008 when we had to downsize for health reasons. As we could not sell it at the time we rented the property out fairly consistently since then. Probably worth £400k now with a £250k mortgage on it
Expert:  taxadvisor.uk replied 11 months ago.
Thank you for your question The property was your main residence for some 15 years out of some 22 years.Private residence relief would cover 198 mths out of 264 mths (approx 75%).You would be able to claim letting relief for the period the property was let upto £40k per owner.Say your gain from sale of property is £225kPrivate residence relief (225,000 x 198/264) = £168,750Gain not covered by private residence relief (225,000-168,750) = 56,250If the property was let fiairly consistently, then this gain would be covered by letting relief and NO CGT payable. More information on private residence relief can be found herehttps://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016 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 11 months ago.
Is there no CGT applicable then even if we do not move back in the property for 6 months? I don't understand your answer
Expert:  taxadvisor.uk replied 11 months ago.
Thank you for your reply..The reasons why you would not pay any CGT are as follows:- The property was your main residence for several years before you downsized it and moved to another property. This period is covered by private residence relief.- provided you have used the property in question as a main residence at some point during period of ownership, final 18 months of ownership are always exempt from CGT- you let the property after moving out. Provided you let a property that was your main residence at some point, there is a further relief available i.e. letting relief. I have taken into account the aforementioned reliefs available and they cover your capital gain and therefore there would be no CGT payable. I hope this is helpful and answers your question.
Expert:  taxadvisor.uk replied 11 months ago.
Hi there, Just checking to see if I have addressed your points and/or you need further help/clarification. Many thanks
Customer: replied 11 months ago.
I don't want to question your answer but another source of advice pointed out that to avoid CGT we should return to live at the property for 6 months. Is this not now the case?
Regards
Jenny
Expert:  taxadvisor.uk replied 11 months ago.
Thank you for your reply.The fact that you lived in the house for several years prior to moving out means you are entitled to private residence relief for that period.Returning to live in the property for 6 months would not exempt you from CGT fully.I have already explained to you what periods would be covered for relief. It is quite likely that there would be no CGT payable because of aforementioned reliefs. I hope this is helpful and answers your question.
Customer: replied 11 months ago.
In your previous reply you state that there would be no CGT payable which is good to know Thank you
Expert:  taxadvisor.uk replied 11 months ago.
Thank you for your reply. If there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it by Just Answer.
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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