Do i pay Capital gains on my house sale

georgephillips

I purchased a house in December 2005 and have spent the last six months doing it up, i now want to sell it, Am i liable for capital gains tax as i do not own any other property,or do i have to live in it for a while.

BobProperty

Probably not. It could count as your PPR but it would depend on your circumstances, the reason for selling and what you do next. Let me explain. If you now buy another property and do that up and sell it in another 6 months the Revenue will start to get suspicious that you are trading as a developer. If your personal circumstances have changed and you now are selling to move away and take up your dream job then you will most likely be OK and can claim it as your PPR. You might want to ask this in the tax forum as well.

georgephillips

i have the opportunity to take redundancy and would like to do one property a year, would it be worth setting it up as a business and if so could i start it from dec last year, or would one a year be classed as just moving house

BobProperty

georgephillips wrote:

i have the opportunity to take redundancy and would like to do one property a year, would it be worth setting it up as a business and if so could i start it from dec last year, or would one a year be classed as just moving house

You''ve just answered your own question - it's a business.

Me_Myself_2

I disageee. If you live in each house as you are doing them up, then you can name them as your principal residence.

BobProperty

Me_Myself wrote:

I disageee. If you live in each house as you are doing them up, then you can name them as your principal residence.

You can try doing that but when the revenue have classed people selling 3 cars in a year as "dealers" (something like that, I can't remember the exact case) then after a couple of deals you are going to need a very convincing argument that you aren't doing it as a business.

Me_Myself_2

I have friends who are on their eighth house in three years and have had no trouble from the IR

devils_advocate

I have friends who are on their eighth house in three years and have had no trouble from the IR

........... yet. If the revenue suspect fraud, (and its their definition of fraud), they can go back more than 7 years.

ahll

Does anyone know how this works if you buy another house and live in it as your main residence as you are doing it up but still keep you old house ?

I am thinking of doing up a cheap house and then selling it to try and make an income. I have to do a Tax Return so what would I need to do ?

Ian_W

ahll wrote:

Does anyone know how this works if you buy another house and live in it as your main residence as you are doing it up but still keep you old house ?
I am thinking of doing up a cheap house and then selling it to try and make an income. I have to do a Tax Return so what would I need to do ?

Point is if you do it as a business to earn an income the IR are likely to want ....
INCOME TAX!! CGT has lots of reliefs plus an annual allowance of £8.8K whereas income tax just has your personal allowance on the profits after allowable expenses.
I suspect Me Myself's friends just have one property at a time which they live in and sell on as their PPR each time. However if HMRC catch on to what they're doing they could still IMHO opinion have problems about trading.

Pennywise

Me_Myself wrote:

I have friends who are on their eighth house in three years and have had no trouble from the IR

But have they told the HMRC about them?

Under "self assessment", every individual is responsible for notifying the HMRC of additional sources of income/gains and to complete tax returns and pay tax as when due. A lot of people think that they're ok because they havn't heard from the IR but that's not the way it works.

You're only in the clear if you have made full disclosure of what you're doing and they have confirmed in writing that they don't want tax returns, or that you have submitted tax returns with full disclosure and they havn't opened an enquiry within the statutory time limits. If you havn't disclosed exactly what you're doing, the HMRC may regard that as deliberate evasion, a criminal offence, and can effectively go back without time limit, though usually going back more than 6/7 years would only be in the most serious cases where they expected a custodial sentence.