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SimonMac
8th September 2016, 10:03
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
8th September 2016, 10:29
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 :rollin: would be able to advise you but I'll dig up the information tonight and mail it over...

northernladuk
8th September 2016, 10:29
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
8th September 2016, 10:35
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 :rollin: 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
8th September 2016, 10:39
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
8th September 2016, 10:54
HMRC Guidance Note 283 (https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016) 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
8th September 2016, 10:56
HMRC Guidance Note 283 (https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016) 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
8th September 2016, 10:59
HMRC Guidance Note 283 (https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016) 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
8th September 2016, 11:03
You can deduct your expenses from the gain also. This includes interest repayments as I understand it.

ContrataxLtd
8th September 2016, 11:08
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

northernladuk
8th September 2016, 11:09
How much profit can you make from a bedsit over a kebab shop in Leeds???

eek
8th September 2016, 11:21
How much profit can you make from a bedsit over a kebab shop in Leeds???

You're going posh there.

I think the amount due is probably very small but do the time plan and talk to Martin...

SimonMac
8th September 2016, 11:23
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

Martin, thank you very much!

I have had the property since 2002, and all in all i think I was not living in the property for 17 months, so worse case it would be 17/168th I would pay CGT on, or roughly 10% of the gain which would be below the £11k allowance?

May take you up on the offer of advice closer to the time.

SimonMac
8th September 2016, 11:29
How much profit can you make from a bedsit over a kebab shop in Leeds???

Depending on the final sale price will be about £48k gain

eek
8th September 2016, 11:30
Martin, thank you very much!

I have had the property since 2002, and all in all i think I was not living in the property for 17 months, so worse case it would be 17/168th I would pay CGT on, or roughly 10% of the gain which would be below the £11k allowance?

May take you up on the offer of advice closer to the time.

So owned and lived in December 2002 132 months
Rented out July 2014 to December 2015 17 months
living in it again December 2015 to sold 9 months extending

As I know martin needs something like that.

MarillionFan
8th September 2016, 11:40
Basically, as it was your primary residence for a number of years then it falls under normally selling your home.

Capital Gains is not payable on your primary residence.

Technically any gains you made when it was rented out you should have to pay some CGT, but frankly I'd not bother with any of it.

Just sell it and keep the money, if necessary giving the GF some, if it was joint. All this, how long you were there for is a waste of time.

MarillionFan
8th September 2016, 11:42
Depending on the final sale price will be about £48k gain

Jeez. Based on the length of time you had it before, and that any proportional increase when you could argue that 'morally' it would be fall under CGT for a few months, is a waste of time as it's still under the CGT allowance.

Methinks you're making a mountain out of a molehill.

ContrataxLtd
8th September 2016, 11:43
So owned and lived in December 2002 132 months
Rented out July 2014 to December 2015 17 months
living in it again December 2015 to sold 9 months extending

As I know martin needs something like that.

That's just what I need and based on that there would be no CGT because the period of non occupation is less than 3 years and occupied either side as the main residence (I assume).

I'm sure SimonMac will get in touch nearer the time to confirm figures if needed.

eek
8th September 2016, 11:52
Jeez. Based on the length of time you had it before, and that any proportional increase when you could argue that 'morally' it would be fall under CGT for a few months, is a waste of time as it's still under the CGT allowance.

Methinks you're making a mountain out of a molehill.

Best to waste a few minutes asking the question rather than ignoring it...

MarillionFan
8th September 2016, 11:54
Best to waste a few minutes asking the question rather than ignoring it...

Anyone with some common sense would be able to see that after 15 years or so, no tax is payable on 48k on a primary residence. I spend more than that on pies each year.

eek
8th September 2016, 12:06
Anyone with some common sense would be able to see that after 15 years or so, no tax is payable on 48k on a primary residence. I spend more than that on pies each year.

True but I would be happier that someone checks rather than making invalid assumptions that come back and bite them...

SimonMac
8th September 2016, 12:36
Basically, as it was your primary residence for a number of years then it falls under normally selling your home.

Capital Gains is not payable on your primary residence.

Technically any gains you made when it was rented out you should have to pay some CGT, but frankly I'd not bother with any of it.

Just sell it and keep the money, if necessary giving the GF some, if it was joint. All this, how long you were there for is a waste of time.

Alas Hector doesn't agree and as I am more likely to go with them than what you say I read this

https://www.gov.uk/tax-sell-home


You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:


you have one home and you’ve lived in it as your main home for all the time you’ve owned it
you haven’t let part of it out - this doesn’t include having a single lodger
you haven’t used part of it for business only
the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
you didn’t buy it just to make a gain


And I fall down on the first and second point, which is why I asked the question, Martin, a subject matter expert, (and also missinggreenfields too) then explained further, and suggested I get qualified advice, which I have said many times even though I don't use an accountant for MyCo, anything above "simple" I will will seek advice, and have found enough good people on the forums to deem it sufficient first level advice (even with the Kebab shop comment from NLUK)

Not sure why you pipped up though fat boy.

MarillionFan
8th September 2016, 12:41
Not sure why you pipped up though fat boy.

Because you're a whining bedwetter pissing their pants over nothing. But feel free to carry on.:laugh

SimonMac
8th September 2016, 12:44
Because you're a whining bedwetter pissing their pants over nothing. But feel free to carry on.:laugh

Yes dear!

Paddy
8th September 2016, 13:03
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?

1. Open up a British Virgin Island Ltd company (company A)
2. Open up a British Virgin Island Ltd subsidiary company (company B )
3. Sell the property to company B at a loss eg £120,000
4. Sell company B to your buyer at a profit eg £500,000
5. No capital gains, not tax and no change on the Landregistry.
6. Draw your money from company A
7. Like who they do in London every day!