CGT on residence now rented

michaels

My wife bought her house 18 months ago, lived their for 2 weeks (she had previously been living in the same property as a tenant for 4 years) and then started renting the property out. I beleive you get some cgt allowance for properties that during the period of ownership have been a principal residence as well as rented out. Could anyone confrm the details and whether it therefore makes sense for her to sell sooner rather than later?
Thanks

silvercar

2 weeks!

If you sell a property that has been your principal private residence you get relief from CGT for the last three years of ownership and any other time it was your PPR. So in theory, your wife should be exempt from CGT.

BUT you may have difficulty convincing the Inland Revenue that it was her PPR as she only owned it for 2 weeks before moving out. Having previously rented it helps her case, but it is difficult to say which way the revenue will go.

She also has a CGT allowance of £8,800, so the tax payable would be reduced.

I always think you should make a business decision on whether to sell, considering the tax implications, rather than letting the tax rules dictate your actions. If you make money you pay tax - but better than not making money!