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Sam, Accountant
Category: Tax
Satisfied Customers: 14195
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I have built a new house in the garden of my original house

Customer Question

I have built a new house in the garden of my original house and moved in December 2012. I intend to move back to the original house asap as my wife prefers it. How long do I have to live in the new house before I can sell it without incurring CGT. I know there is no set period in IR guidelines but what would be defensible should questions be asked ?
Submitted: 5 years ago.
Category: Tax
Expert:  Sam replied 5 years ago.

Thanks for your question

There is no set time, its about the quality of the time that you lived there rather than the time.

Di you move ALL aspects of your life to the new address, such as mail, household and personal bills (also for the old address)and notified all official bodies of the new address.
Did you hook up internet, or digital TV services at the new address, and move all you belongings into the new house?
Have you been trying to sell the original property?


Customer: replied 5 years ago.

All aspects of life moved to the new house including belongings - utilities all registered in our name at new property and internet, Sky TV + TV licence etc. Bank still at old address and HMRC too - so probably best to retrospectively inform them pdq. Have not been trying to sell the original property.

Quality of time ? Very subjective ? The old house is Victorian - the new is open plan contemporary and whilst incredibly beautiful, does not suit our family lifestyle so can't wait to move back to the Victorian. New house valued at £ 1m+ so can't afford to get it wrong and risk a potential CGT demand. Ideally would like to put new house on market in June with sale / completion likely to add another 3 months to process - would have lived at new house 9 months.

Expert:  Sam replied 5 years ago.

Thanks for your response, and apologies for my delay with mine,I was with clients until now.

Just one last question - when was the build complete (and was this the same date that the house became habitable) - was this Dec 2012, when you moved in

Can I ask why the original property was not put up for sale?


Customer: replied 5 years ago.

Build was completed in December and we moved in immediately. Original house was not put up for sale as we wanted to keep options open and we considered keeping it as as holiday rental ( we live on the Devon coast ).


It now also appears there is potential for another building plot on the other side of the original house and an architect is looking at this now - if this gains planning approval we will either sell the plot separately or perhaps gift the land to our eldest son who may build on it. Even if the planning permission is refused we still will be moving back regardless as that house is where we want to be.


Hope this helps.



Expert:  Sam replied 5 years ago.

Thanks for the additional information

On the basis of what you have advised, the new build can be sold without a capital gain arising, as you made it your main residence as soon as it was habitable, and as long as you sell it within 36 months of moving out, then the full period of ownership would be covered by the private residence relief.

I am a little concerned that HMRC could challenge this, due to the fact that
1) You did not change your address for HMRC and bank.
2) You did not attempt to sell the original property, or rent it out but planned to consider it as a holiday rental, yet are to sell the new build, and not consider it as a holiday rental
3) That its just over 3 months since you moved into the new build

However on the plus side, there is much evidence to support the fact this had, at the time, been a genuine move, with all other aspects of your live being moved into the new build, your installed Sky, and all your belongings, (and the plans for the other plot) but I felt it was important to raise my concerns, as this is the view HMRC will consider too.