Would we have to pay Capital Gains Tax???

martinsurrey

00ec25 wrote: »

its not as clear cut as you make out

00ec25 wrote: »

firstly you ignored the primary caveat:
"Before applying TCGA92/S224 (3) you should always consider the possibility that the taxpayer has undertaken an adventure in the nature of trade, see CG65214+." as explained above by saverbuyer

if the OP survives that test and is then subjected to the tests you quoted, then it will come down to patterns of occupancy and timing

move house once every 5 - 10 years and if won't be questioned since as you say an extension or other improvment would not be unremarkable over such a period

move every 2 years for no obvious reason (eg job in another location) making a profit on the way then its possible you'll be investigated

do it every year and its a certainty

The trade test would be a none starter, given the nature of self renovation in the only house you own, and the house you are living in, and the asset (a house), see the comments of the Lord President in CIR v Fraser [1942] 24TC498 at page 502 (which puts the onus on HMRC to prove that this is a trade, and trading your main and only residence is a joke).

See

http://www.hmrc.gov.uk/manuals/bimmanual/BIM60075.htm

I would say that residence of the only house you own is far from “incidental”. This covers (as i said above) people with multiple houses flipping their main residence to abuse CGT relief, not for single property owners.

If it’s not a trade, which it isn’t, then we move back onto the “primary purpose of the acquisition” which in every case is to live in (and the renovation is incidental to having a roof over your head), regardless of the duration.

So you can have your CGT relief in my opinion, if you want professional advice, pay for it!

DannyboyMidlands

Be very carefull. My MIL is currently being investigated for something similar.

I would guess that they moved house every 2 years or so for about a decade. Her working on the house and living off any profit rather than going out to work as normal.

HMRC (who apparently have access to land reg info) are arguing that she was in business as a property developer. Which of course she was.

Either way it's a crappy way to live your life. Always on the move and living on a building site. There's more to life. And anyway, she'd have made more money by going to work and earning a wage.

martinsurrey

DannyboyMidlands wrote: »

Her working on the house and living off any profit rather than going out to work as normal.

this is what has done her in.

the OP is not intending to use the money as a means of living, but to reduce a mortgage, the profit is incidental to living there as a home, your MIL needed the profit to eat, very different.

dodger1

To be honest what would bother me the most would be the continual upheaval for the kids. New schools, new friends etc would be bad every couple of years. Five years or so no problem.

martinsurrey

dodger1 wrote: »

To be honest what would bother me the most would be the continual upheaval for the kids. New schools, new friends etc would be bad every couple of years. Five years or so no problem.

I was brought up doing this, and to be honest, I loved it, my parents only moved within the same school catchment, so same friends and schools, and it gave me both a firm appreciation of hard graft, and a love of power tools (this one is becoming expensive though).
With children it’s a bit trickier, but by no means impossible/detrimental.

dodger1

martinsurrey wrote: »

I was brought up doing this, and to be honest, I loved it, my parents only moved within the same school catchment, so same friends and schools, and it gave me both a firm appreciation of hard graft, and a love of power tools (this one is becoming expensive though).
With children it’s a bit trickier, but by no means impossible/detrimental.

I agree if it's just around the corner and all else remains the status quo.

dimbo61

If you buy a property that needs a new bathroom and kitchen and you have the work done and live there for 18/24 months and then move UP the housing ladder how can the HMRC want a slice?
It,s called a housing ladder for a reason Up and Down
Now if you never live in the house and sell within 6 months that would be different