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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5142
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I own 2 properties with my now, ex boyfriend. We want to sell

Customer Question

I own 2 properties with my now, ex boyfriend. We want to sell one of the properties which was classed as our second home, because it is too far away from where I need to work and live, but for the past 6 months, since we have separated it has been my main residence. We are not married but are both on the mortgage and land registry deeds for both properties. I have been told that we can sell the property that I live in without paying Capital gains Tax because it is my main residence. Is this correct?
We do rent out a self contained flat in the basement of this house that I live in. This is another possible reason to have to pay Capital Gains tax. I was told if the property was completely empty when it was sold then we wouldn't pay Capital gains tax on the flat part of the house. Is this correct?
So I need to know if there is anything I can do to help reduce the Capital Gains tax we might have to pay before I put it on the market.
Any advice much appreciated. Regards Claire
Submitted: 2 years ago.
Category: Tax
Expert: replied 2 years ago.
Thank you for your question..The statement is partially correct. Let me explain the reliefs available to you as the property in question has been your main residence at some point during period of ownership.1. You will claim private residence relief for all the period the property is your main residence. You can only treat one property as main residence at any point in time. You should notify HMRC of change of residence within 2 years of acquisition of second property otherwise HMRC would determine what is main residence for CGT purposes based on facts.2. Last 18 months of ownership qualifies for relief whether you live in or out of the property provided it has been your main residence at some point.3. If the property has been your main residence at some point and you have also let it, then there is letting relief available up to a maximum of £40,000 per owner.If you can satisfy HMRC that the property you are now living in qualifies as main residence albeit for a short period then you would claim the aforementioned reliefs before your gain attracts CGT.More information on private residence relief can be found here I hope this is helpful and answers your question.If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.
Customer: replied 2 years ago.
We bought the second property in May 2012. I lived in it while renovating it for the first year and then moved back to the first property until I split up with my boyfriend in July of last year 2015. I didn't notify the council until then (july 2015) that the second property was my main residence. So what does that mean and what do we do when we sell the property this spring/summer in terms of notifying the Tax office? Also, can we give the tenant notice to leave the property prior to selling so that when it sells we can avoid paying Capital Gains Tax?We bought the property for £215,000 and it has a recent valuation of £450,000 so can you tell us what kind of CGT we are likely to expect if at all?Regards, Claire
Expert: replied 2 years ago.
Claire, thanks for your reply.The second property was your main residence from May 2012 for approx one year and then since Jul 2015.Provided your correspondence is addressed to this property, for certain period from Jul 2015 would qualify as main residence. You may struggle to satisfy HMRC that this property was your main residence for nearly one year back in 2012/13 as no one was notified of that fact at the time.Please advise for how long the property was let if you moved into this property in Jul 2015. Is it still let? Many thanks
Customer: replied 2 years ago.
I forgot to explain that the property consists of one main 4 bedroom house and below at ground level one 2 bed self contained flat which we have rented out since July 2013. The main house is where I live.
Regards, Claire
Expert: replied 2 years ago.
Thanks for your reply.The self contained flat provided it is an intergral part of the property and sold as one unit would enable you to claim letting relief.This is fully explained in HS283 that I mentioned and provided you with a link in my previous posting. I hope this is helpful and answers your question.If there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it by Just Answer.