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tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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Hello, I have recently purchased a property (with a mortgage

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Hello, I have recently purchased a property (with a mortgage ) with my partner. I now need to decide what to do with my property. My property has a mortgage & some capital. If I rent the property for a year or so, when I sell, will it mean I have to pay capital gains tax, even if the proceeds will be put towards the mortgage I have on the property with my partner ?

tdlawyer :

Hello, thank you for your question.

tdlawyer :

My name is XXXXX XXXXX can help with this.

tdlawyer :

Will you be living in this home as your sole dwelling?

Customer: Yes, I will be living in the property I have just purchased with my partner
tdlawyer :

Okay. Then there would be no capital gains to pay as you should be able to take advantage of what is known as the Private Residency Relief. You can get more information on that from the HMRC website here:

Customer: So, even if I rent the property which is in my name & not live in it I can sell in the future & put the proceeds into the property that I do live in...sorry to repeat just want to be clear
tdlawyer :

Sorry, I was working on the basis you were going to be living in the property when you sold it.

tdlawyer :

If you are not living there, and you have purchased it for an investment (e.g. your renting it out), then you would end up paying CGT on any gains.

tdlawyer :

Of course, if you buy for £200k with a £195k mortgage, and you sell for £200k, then you have a gain of £5k. You have an annual allowance of just a little more than £10k, so that would be okay, with no tax to pay.

tdlawyer :

But if you made a gain of £50k, for example, you would be paying tax on it. The rates and thresholds are here:

Customer: Hi, I didn't originally purchase my property for investment as I have lived in it it for the past 4 years, but I guess if I rent it out then it could be classed as an investment. I have been in my new property now for 2 weeks. If I decide to sell the property now that is in my name without renting it I will not have to pay tax as there is only a short period go buying & selling the properties?
Customer: i didn't originally buy my house as an investment as I lived in it for 4 years. If I decide to sell it now without renting I guess I will avoid paying tax even if there is a short period between buying & selling?
tdlawyer :

Yes, if you rent it out now, it becomes an investment and subject to CGT upon disposal. Yes, if you sell it now, then I expect you should be okay and avoid CGT as factually, it was (or is still) your principal residence.

Customer: Ok, thanks for your help
tdlawyer :

You're welcome. Is there anything else you would like to ask?

Customer: Just one more thing, when I sell the property, who notifies the HMRC, is it me or the solicitor managing the sale?
tdlawyer :

When it's sold, the new buyer will need to inform HMRC via stamp duty - so they will know it's sold. however, from your end, it is you that is obliged to notify HMRC of any disposition etc. in your personal tax return.

Customer: Thanks for your help, enjoy your evening
tdlawyer :

Thank you - you too.

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