Do you have to pay tax on second home that family are living in?

Occams_Razor_2

they should just move in for a few months, before selling it and call it their primary residence which is exempt from CGT.

you can switch your primary residence as easily as an MP

Ameliajane2011

Thanks for all your help and replies. It certainly gives us something to think about. Will dicuss info received with my parents later. Thanks again

CLAPTON

Occam/s_Razor wrote: »

they should just move in for a few months, before selling it and call it their primary residence which is exempt from CGT.

you can switch your primary residence as easily as an MP

this is not so

although making the property your principal private residence for a time does indeed greatly reduce cgt it doesn't make it exempt

Occams_Razor_2

CLAPTON wrote: »

this is not so

although making the property your principal private residence for a time does indeed greatly reduce cgt it doesn't make it exempt

it most certainly does.

CLAPTON

Occam/s_Razor wrote: »

it most certainly does.

perhaps you can quote from HMRC who seem to say thet PRR applies if it has been you only or main residence through out the period of ownership


e.g from HMRC

What is Private Residence Relief?

When you sell or dispose of your own home you don't usually have to pay any Capital Gains Tax - as long as for all the time that you've owned it both of the following apply:

• it's been your only home or main residence
• you've used it as your home and nothing else

You may also qualify for this relief if you sell part of the garden that's attached to your home without selling your home at the same time.

00ec25

Occam/s_Razor wrote: »

it most certainly does.

unless you live in it as your main residence for the time you own it (barring the last 36 months), or you do an election within 2 years of owning the second property (and this election applies from the exact date you started the ownership of the second property), then you are talking UTTER rubbish

as for the OP:

as others have said if your parents buy the property wholly in their names then yes of course they will have a CGT bill as it is not their main residence, however, they will only pay tax on the profit element, so it is not a deal breaker at all, they will always get back what they paid for it plus a portion of any profit, so they will never lose due to tax - they could of course lose if its goes into negative equity but that is nothing to do with tax.
eg. If the house gains in value by say £100K then they will (in simple terms) pay £18k in tax and pocket the remaining 100 -18 = £82k. In what way is receiving £82k a deal breaker?

you paying them rent has nothing to do with CGT, they will be liable for CGT whether you pay rent or not

if they do receive rent then they will be liable for Income Tax on the net profit they make, ie rent received less eligible costs. If they have remortgaged their own house in order to buy the property which you then rent from them, they would be allowed to claim (only) the interest element of the increase in their mortgage as an eligible cost

as for you, you will of course have to pay Income Tax on the profit you make from renting out your own "home" and will also, after 36 months, be liable for CGT on the sale of your own "home" since by then it will have ceased to be your main residence and thus lose its CGT exemption

G_M

Just to change the subject from the house your parents are thinking of buying you, you also say:

am moving to the area and my house hasn't sold so will be renting it out.

So you are aware aren't you that:
a) the rent you receive will need to be declared as income for tax purposes and
b) you may have a CGT liability when you sell this property as it will not have been your main residence.....