Capital Gains on Property

[SimonMac]

Thinking about selling the house I own, it's the only house I own but I don't live in it, I used to live in the house but after I split from my ex she stayed in the property and paid me rent, does this class as a BTL for CGT?

[eek]

Thinking about selling the house I own, it's the only house I own but I don't live in it, I used to live in the house but after I split from my ex she stayed in the property and paid me rent, does this class as a BTL for CGT?

Yep - it is a BTL but if you lived there in the past 2 years prior to sale it you wouldn't have CGT to pay and its tapered if you lived there before - the other question would be did you own it when you lived in it?

Your accountant would be able to advise you but I'll dig up the information tonight and mail it over...

[northernladuk]

I'd say yes as I doubt you can prove its your principle residence. Does the ex have a share in the house at all? Are you on good enough terms to use her CGT allowance as well?

You bung some of it in your pension to reduce CGT?

[SimonMac]

Yep - it is a BTL but if you lived there in the past 2 years prior to sale it you wouldn't have CGT to pay and its tapered if you lived there before - the other question would be did you own it when you lived in it?

Your accountant would be able to advise you but I'll dig up the information tonight and mail it over...

Yeah I lived in it when I owned it, moved out about 16 months ago.

[eek]

Yeah I lived in it when I owned it, moved out about 16 months ago.

In which case I believe no Capital Gains Tax would be due. I'll dig the appropriate advice link out for you later...

[missinggreenfields]

HMRC Guidance Note 283 may help:

"Example 4
You bought your house in January 2004 and sold it in January 2016. You lived in the property as your only or main residence apart from 18 months in 2005 and 2006, when you lived in a different house. So the house qualifies for relief for 126 out of the 144 months you owned it. A proportion of any gain you make from the disposal amounting to 126/144 will qualify for relief. If you had moved out of the house at some time after July 2014 instead of in 2005 and 2006, your relief would not be restricted. If you had bought the house before 31 March 1982, the calculation above would begin from 31 March 1982 and not from when you bought the house."

[eek]

HMRC Guidance Note 283 may help:

"Example 4
You bought your house in January 2004 and sold it in January 2016. You lived in the property as your only or main residence apart from 18 months in 2005 and 2006, when you lived in a different house. So the house qualifies for relief for 126 out of the 144 months you owned it. A proportion of any gain you make from the disposal amounting to 126/144 will qualify for relief. If you had moved out of the house at some time after July 2014 instead of in 2005 and 2006, your relief would not be restricted. If you had bought the house before 31 March 1982, the calculation above would begin from 31 March 1982 and not from when you bought the house."

note bit in bold

[SimonMac]

HMRC Guidance Note 283 may help:

"Example 4
You bought your house in January 2004 and sold it in January 2016. You lived in the property as your only or main residence apart from 18 months in 2005 and 2006, when you lived in a different house. So the house qualifies for relief for 126 out of the 144 months you owned it. A proportion of any gain you make from the disposal amounting to 126/144 will qualify for relief. If you had moved out of the house at some time after July 2014 instead of in 2005 and 2006, your relief would not be restricted. If you had bought the house before 31 March 1982, the calculation above would begin from 31 March 1982 and not from when you bought the house."

So I would only pay for the 18 months (in the example above) which would probably be lower then the £11K allowance anyway?

I don't understand the "your relief would not be restricted" is that better or worse as I moved out just before July 2014

[suityou01]

You can deduct your expenses from the gain also. This includes interest repayments as I understand it.

[ContrataxLtd]

SimonMac

Make a timeline from when you bought the property to when you sold/sell the property and if you lived in it this whole time (including periods of deemed occupation) it will be covered by your principle private residence relief and thus free from CGT.

At the moment you aren't living in the property so you could have some CGT to pay, only the last 18 months immediately prior to sale are deemed occupation (assuming you aren't living elsewhere for work commitments or will be moving back into the property at any point) so if you don't sell within 18 months of moving out then CGT could be payable.

If CGT could be payable you would then have to look at lettings relief to try and mitigate some or all of this too.

Am I right in thinking you do your accounts yourself so can't clarify with your accountant? Drop me a PM if you want to discuss in more detail.

Martin
Contratax Ltd