Capital gain tax!! I need help!!!

holly_hobby

If you sell the property when it is your primary/main residence there is no CGT.

Lettings relief is only if the property has been used as a Primary residence and subsequently let after this residency (LR has a max 40k benefit), and does not apply where the property was purchased and immediately let and then sold, or never acted at any point as the primary residence of the beneficial owner prior to its letting before sale. So ignoring the primary residence status we have, it would not apply in this instance in any event.

You have annual CGT relief for all beneficial owners (beneficial means the named do not have to be party to the mge or deeds - but can demonstrate that they financially benefited & paid tax on rental income, married couples would be deemed to both equally benefit).

The 3 yr rule applies after the property was vacated as a primary residence (aka if never a primary res before sale you cannot use the last 36 mth cgt exclusion rule). I.e - you cannot let it from outset, then move in, and then back track the 36 mth reg from that date - which is irrelevant anyway if the property is now primary residence and entitled to full PRR (which HMRC may well require documentary evidence of, such as all bills, bank accounts etc in your name and held at that address, usually from the period it became your primary res due to its previous let status, which they will be aware of from HMRC returns).

The point about married couples and primary residence is correct, married couples by virtue may only have 1 official main residence.

The 2 yr nomination rule, is most relevant where individuals hold multiple private residences (ie not let), and it is not clear which is their primary residence. If no nomination is made HMRC will elect which they believe to be the PR and which isn't (which can really muck up CGT planning !). However where an individual owns say 2 properties, one being let out, and the other not, it is obvious to HMRC which is acting as primary residence and which is not - it is only really where you have unlet properties within a portfolio that the 2 yr nomination timeframe and process becomes absolutely essential.

You are letting your ex-main residence (Jan 2012), so again 2 yr nomination isn't essential but you may wish to do it any way. If however your property ceases to be let, and/or you own other private property or properties, it is essential at that point that you nominated your PRR to HMRC. Any nomination may also be reversed at a later date, say when you move out of one property acting as your primary res. to another.

NB - as your property rented Jan 2012, was previously your primary residence, and if sold whilst remaining not your PR, that WILL qualify for cgt reliefs of :- time spent as PR, lettings relief (max 40k reduction), exclusion of last 36 mths of ownership, all losses and annual cgt allowances (as determined by HMRC) - which means in most cases such as this, you need an awfully large gain to end up paying anything in CGT.

As anything with tax always check forum guidance with a licensed practitioner, just to top and tail it.

So, to answer the orig Q - as the beneficial owners proven primary residence, on disposal there will be no CGT calc/liability reqd.

Hope this helps

Holly