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bigduckontax, Accountant
Category: Tax
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We are having to move out of our principal residence to a smaller,

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We are having to move out of our principal residence to a smaller, accessible property nearby to assist my husband who has dementia and physical problems. We are not selling the principal residence as we need to see whether he can settle in and indeed whether his health problems will lead to needing residential care. Should we decide to sell the principal residence will we be liable for Capital Gains Tax?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Well, yes and no; there is a permitted 18 months gap between vacation and sale during which Private Residence Relief (PRR) is extended and the owners deemed to be in residence even if this is not the case. If the tax does kick in as disposal is over the said 18 months it would be proportionately very small reflecting the limited period involved. In any event as you own jointly any gain is divided by two, ie half each. Also each of you have an Annual Exempt Amount (AEA) of 11.1K to offset any taxable gain so this could well eliminate any liability. Without full details of ownership dates and sums involved I cannot advise fully on any possible liability and have given the general position. I do hope that my reply has been of assistance.
Customer: replied 2 years ago.
Thank you Keith. It may be relevant to note that the principal residence has been on the market for 9 months (£785k) and because of my husband's deteriorating health we really can't wait much longer to move. The property has been in my sole ownership for over 20 years, prior to our marriage. We have recently sold my husband's former commercial premises which together with savings will fund purchase of a smaller home (£330k).
The 18 month exemption rule does not begin to run until you vacate so the period it has been on the market so far is irrelevant. As you owned this property forget the 'divide by two' instruction;' I had assumed a joint ownership! Your husband's former commercial premises sale will, of course, attract CGT, but as he is going out of business Entrepreneurs' Relief would apply which limits taxation on the gain to a flat rate of 10%. Please be so kind as to rate me before you leave the Just Answer site.
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Customer: replied 2 years ago.
Thank you for a very swift response and very clear advice.
Delighted to have been of assistance. Thank you for your support.
Customer: replied 2 years ago.
Just a small supplementary question if that is permitted, please? Were we to rent out the principal residence for a period during the 18 months would the Capital Gains Tax situation be affected?
No, as you are deemed to be in residence for those 18 months. Any rental income received less expenses would have to be declared on your Annual Self Assessment Tax Return