can I avoid Capital Gains

harryhound

It depends where you go - your host country might have a Capital Gains Tax law too.

findingout

If you move in and make it your main residence/first residence then live there for 6 months or a year (have been told two different time scales) then no capital gains as it is your main home you just need to double check the time scale for it to behome your main home so you are not seen to be getting out of capital gains.

taxing

findingout wrote: »

If you move in and make it your main residence/first residence then live there for 6 months or a year (have been told two different time scales) then no capital gains as it is your main home you just need to double check the time scale for it to behome your main home so you are not seen to be getting out of capital gains.

Err, not quite but sort of - he has owned the house 25 years -lived in it at the start, then rented it out. Principal Private Residence relief is give for periods of actual occupation (or residence). Also, and if certain conditions are met, it is also given for periods of (by Legislation) deemed periods of residence. Then there is letting relief which is given for the gain arising in the letting period but that relief cannot exceed the calculated relief due for PPR (actual occupancy), or £40,000 whichever is the lower.

Deemed periods where you have gone abroad to work and are prevented from coming back to the house do not require you to return to the house to live before selling BUT in all other cases (and probably in this case) you do have to return to live in the house again before you sell it. The quoted 6 months of occupancy is in point here.

For lettings relief, you do not have to return to live in the property before selling. The only requirement for that is that you did live in it at some point.

In all cases, and provided it was the sellers home at some point, then the last 36 months are always deemed occupation. Here, and assuming the tax payer goes back there to stay for last 6 months then that six months will be part of the final 36 months.

The last 36 month allowance will probably also eat in to the lettings relief period, too - assuming it was let until owner goes back to stay - as some of the 36 months deemed occupancy (work backwards in dates) will overlap - where the relief periods overlap you can only count one of them.

Simply living in the house at the start and end of ownership does not 'secure' CGT exemption. It might, if you only own the house for a short while, but in cases such as this you really do need to set out a table of the dates lived in/rented out/ etc etc and count up the months and do the calcs.

The previous post on this forum re CGT on house sale sets it all out beautifully.
Regards.

00ec25

also note that because you owned it prior to 1982 the calculation is restricted to using the market value as at 31 March 1982, not the actual purchase price of £12K from 1978.

You will need to work out the 1982 value, but it should be higher than your 12K so works in your favour anyway. The VOA site provides a start ... or ask HMRC to do it for you...

If you want HM Revenue & Customs (HMRC) to check your valuation, to help you complete your Self Assessment tax return, you should complete and send form CG34 Post Transaction Valuation Check to your Tax Office after you've disposed of the property.
Please allow at least two months for HMRC to check the valuation.
Download form CG34 Post Transaction Valuation Check (PDF 44K)

See more on 1982 values on the Valuation Office Agency website (Opens new window)