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JGM, Solicitor
Category: Law
Satisfied Customers: 12176
Experience:  30 years as a practising solicitor.
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I have 2 properties. a house bought in 1983 for £165000 and

Customer Question

i have 2 properties. a house bought in 1983 for £165000 and a flat bought in 1988 for £55000. The house is my main residence now and is valued at £1,250,000. The flat which has never been rented out is valued at £700000 and therefore has a taxable unrealised profit of £645000 subject now to 28% CGT ie.£180000. I would like to avoid paying this tax. Friends have said that if I sell my main residence and move into my flat and make this my main property that there will be no tax to pay when I sell it? My preference is to keep my house and move into the flat for a period of time before I sell it and then maybe move back into my this possible
Submitted: 2 years ago.
Category: Law
Expert:  JGM replied 2 years ago.
Thank you for your question.
If you move to the flat and make it your main residence you will be able to sell it with full private residence relief and so there will be no CGT to pay.
However the period you are away from the house will not qualify for private residence relief so if for example you stay in the flat for the next six months and then sell it, if you sell the main house in the future the gain on sale will be subject to tax for the months you lived in the flat.
So in round figures if you made a gain on a future sale of the house of £1200000 you would take:
6/(total months owned) x(###) ###-####= chargeable gain LESS annual allowance x 28% = tax due
I hope this helps.
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