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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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I have owned a 2nd property in Bucks. 30 years and lived in

Resolved Question:

I have owned a 2nd property in Bucks for approx. 30 years and lived in the property for approx the first 10 years.
When I first bought the property I owned a second property in London which at the time I named as my main home although it was outside the time limit to name a property.
I sold the London property after approx 10 yrs to buy the property I now live in and have rented out the Bucks property since that time.
I now want to sell the Bucks property and want to know if I can offset the 10 yrs that I lived in the property for capital gains purposes.
Also my nephew is interested in buying the property but can only get a mortgage for approx half the price.
Is there any way I can sell the property to him and for me to put down a deposit for half the property which I would get from this property. Is this beneficial for capital gains purposes?
Thank you
Submitted: 6 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your question...

Please clarify for me..

You say you lived in the Bucks property for the first 10 years and during that time you also owned a second home in London. For CGT purposes, the London property was nominated as your main residence. Was there any period when the Bucks property was your main residence?

The second part of your question related to CGT on selling the property to your nephew.. would you own any share in the property or will it be 100% in his name?

Many thanks

Customer: replied 6 months ago.
the Bucks property was my main residence for the 10 years although I still owned the London property which was rented out for the 10 years although I named London after the allocated time as my main property.I do not mind if the property is half owned by my nephew and half by myself or 100% in his name - I was looking at the best scenario for capital gains etc and whether this was better and easier to do that selling the property and then buying another with my nephew.
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your reply..

Provided the property in Bucks was your main residence at some point during the period of ownership, you could claim

- private residence relief for period covered as main residence

- final 18 months of ownership

- letting relief for the period property let (maximum relief is £40,000)

The above reliefs are covered in HS283 here

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016

Purchase of property.. if you were to sell half share in your property, then you are deferring CGT on that part you retain and only pay CGT on the gain arising from sale of share to your nephew..

If you were to buy another property with your name on the deed, then it would be deemed second home and liable to second stamp duty.

You may wish to consider first option.

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 6 months ago.
Thank you for your reply.
If I can prove that the Bucks property was my main property with bills paid etc. does this class it as my main property even if. I still had the London property at the time or do I have to have lived in the Bucks property after sold the London property. If I named the London property as my main home although it was late would the Tax Office still take this as my main home or as I said if I can prove I lived in the Bucks property is that enough.
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your reply..

You can only have one main residence at any one time.

In the absence of a nomination, the main residence is determined by facts e.g.

what was your address on your bank statements, HMRC correspondence, Council tax bills, where was your GP, entry in electoral register, where did you spend more time.

You stated ealier, you sold your London property ..did you claim private residence relief against capital gain when you sold that property.. if yes, then you can't claim relief for the same period against Bucks property.

I hope this is helpful.

Customer: replied 6 months ago.
Sorry for not replying before. When I sold the London property I paid no capital gains tax on the sale and would need to check but believe I just listed the sale as income on my tax return and did not deduct any expenses etc. Due to the taper relief etc and allowances that were in place at that time and the fact that I lived in the London property for 1-2 years as my only property I do not think there was capital gains due on this property when I sold it in 1997 - the profit on the property without any deductions would have been approx. £48,000. I bought the London property in 1983 and sold it in 1997 and bought the Bucks property in 1986.
Customer: replied 6 months ago.
Also could you clarify what is private residence relief please?Thank you
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your reply..

You state you resided in London property for 1-2 years as your only property and Bucks property was bought in 1986.

Based on information provided, you could claim PPR for Buck property for the period it was your main residence as mentioned in my posting of 15/07/2016.

Private residence relief is available against CGT for residential property that has been your only and main residence during period of ownership. If the residence was for all period of onership then you get 100% relief. Otherwise it covers the period the property was your main residence. As an example, you live in a property for 10 out of 20 years of ownership then private residence relief is available for 10 years plus final 18 months of ownership (138/240 months).

I hope this is helpful and answers your question.

I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.

taxadvisor.uk, Chartered Certified Accountant
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