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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4956
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I have a question.I purchased a flat with my partner 9

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I have a question.
I purchased a flat with my partner 9 years ago and lived in it couple of yeRs before moving abroad work. I rented the property in that time. I returned in summer 2014 but still rent the property as my newcplace of work is too far to commute from my old flat. Before moving back i purchased a holiday home in the uk with a friend in spring last year. I own only a fraction of it however.
Since then i have found a house to purchase near my new place of work and am trying to sell the first flat purchased 9 yrs ago. If i buy the new house before the sale of my old flat will i be lable gains tax
, I'm Keith and happy to help you with your question.
HMRC Helpsheet 283 sets out the conditions under which Private Residence Relief (PRR), which allows 100% relief on any gain, is extended in certain situations. Here is the relevant extract:
' The qualifying periods of absence are:
a. Absences reason, totaling not more than three years in all
b. Absences during which you are in employment and all your duties are
carried on outside the UK
c. Absences totalling not more than four years when
— the distance from your place of work prevents you living at home, or
— your employer requires you to work away from home in order to do
your job effectively.
You will keep the exemption b. and c. if you cannot return to
your dwelling house afterwards because your existing job requires you to
work away again.'
From these rules you will see that your PRR is extended to cover the whole period you worked abroad. Furthermore last 18 month's of ownership you are deemed to be in residence even if this is not the case. Under the circumstances you should escape any Capital Gains Tax pursuant to any gain made on the sale of your property.
I do hope I have been able to set your mind at rest on this matter.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 3 years ago.
What about the situation around buying a new property whilst owning the old flat which is on the market. If i buy the new one before i sell, i will effectively at one stage own three properties. A fraction of one holiday home , the old flat that is too far to commute from and is and the new one that would have just been purchased as its near my work. Based on this are you saying i will not be liable gains tax whe n i sell the old flat because the new one just bought would be my main house.
That is why an 18 month overlap is provided in the legislation. Even HMRC recognise that you cannot sell a house as quickly you can your car! I suggest that you will escape Capital Gains Tax altogether within the scenario you set out in your question.
Customer: replied 3 years ago.
So as long as the property sells within 18 months from me purchasing the new house i should be fine.
Correct; and if it does not than the gain exposed to tax will be very tiny as it will be proportionately reduced by the time in months it was you sole or main domestic residence, the extension time of PRR whilst you worked abroad or elsewhere in the UK plus the last 18 months divided by the total ownership period. Even then this would almost certainly be absorbed by Lettings Relief, available up to 40K, leaving no gain to be taxed.
Customer: replied 3 years ago.
This is helpful. Im certainly hoping to sell the flat within 18 mths. Assume the 18 myhs begins when i purchase the other place. Do i need to fill oyt forms around this then
You are correct. There is nothing to be done at this stage.
Customer: replied 3 years ago.
Thanks v much
Delighted to have been of assistance.
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Customer: replied 3 years ago.
Just did. Thanks
Thank you support.