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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15916
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife and I sold our house in January 2016 and made a

Resolved Question:

Hi,
My wife and I sold our house in January 2016 and made a profit, we are now trying to find out if we will have to pay any Capital Gains Tax.
I understand from the HMRC website that you do not pay Capital Gains Tax when you sell your main home however we had a slightly unusual situation which means we're unsure about the tax position.
We had lived in our house for a number of years but then moved to Singapore for work reasons and rented our house out.
We returned in May 2015 but did not move back into our owned home because the tenants we had living in the house had been there for a number of years and ended up buying from us directly.
We do not have any other UK property.
Would the house still be deemed our main home? As we were non-resident in the UK during part of the ownership does that cause any issues?
Thanks,
Nick
Submitted: 9 months ago.
Category: Tax
Expert:  TonyTax replied 9 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 9 months ago.

You won't qualify for absence relief as you didn't re-occupy the property before you sold it. That would have exemption the whole gain from CGT.

You will get exemption from CGT for that part of the gain covered by your occupation of the property and for that part of the gain covered by the last 18 months of ownership. You will also get letting relief for any period the property was let which isn't covered by the last 18 months of ownership. Letting relief will be the lesser of:

1 £40,000,

2 the sum of the gains for the period you lived in the property and for the last 18 months of ownership and

3 the gain for that part of the letting period not covered by the last 18 months of ownership.

Take a look at Example 9 in HS283 for an example where main residence relief and letting relief are given.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 9 months ago.

Assuming the property was jointly owned, each of you will qualify for letting relief of up to £40,000 individually. You have to divide the gain in two and then apply the reliefs to your respective shares.

Customer: replied 9 months ago.
Hi Tony,Thanks for the response. How would we calculate the gain over the different periods? Would this be a simple gain divided by years owned calculation?Please could you confirm my analysis/interpretation below is correct?We brought the house jointly in July 2009 for £250,000.We rented the house out from September 2011 to Jan 2016 while we lived abroad.We sold for £380K in Jan 2016 so have made a gain of £130K., divided between two of us means £65K each.Over 6.5 years that would be £10K gain each year.First two years = gain £20K each - while we lived there = exempt from CGT
Three years of rental = gain £30K each - as per your advice this should be covered by the letting relief = exempt from CGT
Last 18 months = gain £15K each = exempt from CGTMany thanks,
Nick
Expert:  TonyTax replied 9 months ago.

I'll do some quick calculations and get back to you.

Expert:  TonyTax replied 9 months ago.

I do the calculations using months but your figures are not far off. You should have no taxable gain. You can claim the costs of buying and selling the property against the gain too (legal fees, stamp duty, survey fees selling agent fees etc).

Customer: replied 9 months ago.
Thanks Tony.I assume we still complete the CGT section of the Tax Return Self Assessment ?Regards,Nick
Expert:  TonyTax replied 9 months ago.

Yes, you do.

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