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ickle

Member Since: 22 Jul 2010
Location: South Vendee
Posts: 1786

2008 Defender 110 Puma 2.4 CSW Alpine White

TAX! - rules on capital gains

Would any one of you knowledgeable folk on here know the rules on the following:

IF someone owned two houses in the UK, first owned /lived in for 20 years plus, second one owned and rented out for a couple of years, how long would you have to live in the second one as your main residence before you'd be able to legitimately claim any gains made from its development as exempt from tax?

Cheers Keith

8th Jan 2017 3:25pm

leeds

Member Since: 28 Dec 2009
Location: West Yorkshire
Posts: 8582

Have done the opposite to you but am guessing the same rules apply.

Houses used as 100% principal residence are exempt from capital gains.

Your second home will most likely always be liable for capital gains on the period when it was rented out no matter how long you have lived in it after the two years.

IF any tax is payable would depend on any capital gain in the first two years offset by capital gains relief. Keep a good record of any repairs/renovations done on the property. Repairs are considered different to improvements which will have an influence on capital gains liability

Your best course of action is to get 2 or 3 realistic valuations. Also keep an eye on sold house prices in your locality on sites such as Nethouseprices.com. Nethouseprices are good if your house is typical in your area.

Best advice will be to ask your accountant who should be aware of your personal situation and latest tax regulations.

Just be aware that HMRC does keep an eye on change of ownership with Land Registry, has access to tax returns, electoral roll, street view etc. If you get caught in one of their area investigations you will have a lot of work to satisfy HMRC before they close the case.

Brendan

8th Jan 2017 4:11pm

Morepower

Member Since: 08 Jan 2013
Location: Fife, Scotland
Posts: 630

I think it's one full year now... Used to be six months..

Regards

Tim It doesn't matter how bad it is, It can always get worse...

2013 Bowler 110 (Sold)
2016 Bowler 90 Rally Spec (Sold)

8th Jan 2017 4:51pm

leeds

Member Since: 28 Dec 2009
Location: West Yorkshire
Posts: 8582

Some reading material for you

https://www.gov.uk/tax-sell-home/let-out-part-of-home

http://www.landc.co.uk/mortgage-guides/tax-buy-to-let-property/

Keep good records and get good professional advice.

Once got caught up in a general sweep by HMRC. Took about 15 months and a lot of work to satisfy ALL HMRC questions. They did not visit the property concerned but used historic Streetview film in the middle of summer so that trees and bushes obscured things. So had to return to the property and take loads of photographs. Also had to get historic planning approvals to back up my case.

The CGT I had to pay was what I had paid previously. £0 but had a lot of hard work to satisfy HMRC that my tax affairs were in order.

So best advice is get good professional advice from someone who understands your full personal situation.

Brendan

8th Jan 2017 5:29pm

ickle

Member Since: 22 Jul 2010
Location: South Vendee
Posts: 1786

Thanks Guys - yes I thought it was 12 months, and I will be doing it properly, tax wise, just trying to get some form of time line in place.

Cheers Keith

8th Jan 2017 5:49pm

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