Minimising CGT on Two Properties

josswallace

We bought our house in 1987 for £100,000 spent £125,000 in extending it and it is currently worth about £600,000. We bought our flat in 2005 for £230,000, Spent £125,000 on renovation and it is now worth about 750,000 and has been let since 2006 on an AST

Our medium term aim is to sell both properties and consolidate our assets into one marital home. Our plan is to first of all sell our house and move into the flat. Once in the flat our intention would be to sell that at the soonest finacially attractive moment.

We are extreemly flexible in terms of what we do, and I am just trying to minimise, within the law, our CGT liability.

Any advice on how to minimise the CGT liability would be appreciated.

dan.date66

Three things would really help with the calculation(s).

1) Have you lived in both/either home, and for how long?
2) It appears that you are married, but for how long (i.e. was there any point where one partner was living in one home and in the other before you were married?)
3) How is ownership split on the properties? All in your own name, 50:50 with spouse, or one in each name etc?

josswallace

Many thanks for your prompt reply.

I used to live in the flat prior to 1987 when we bought our house. Both the house and the flat are in joint names and we have lived in our house since 1987. We got married in 2006.

I trust this covers your queries.

Ian Wallace

nomunnofun

Move into your flat and the house would be exempt upon sale due entirely to principal private residence relief. I would live in the flat for at least a year to ensure that no doubt can be cast upon the fact that it has become your main residence. If you move in in June 2013 (having owned it since June 2005) and sell it in June 2014 you will have owned it for nine years. One year means that the final three (by virtue of the fact that it was, at some time, your main residence) will be exempt. In other words 3/9 of a potential gain of £395000 will be exempt - which is some saving!

P.S. what is an AST?

josswallace

Can you cali 4 years even though the yer residing in it is part of the last 3 years.

CLAPTON

a bit confused

in post 1 you say 'we bought the flat in 2005'

in post 3 you say 'I used to live in the flat prior to 1987 ' ..was that before you owned it?

nomunnofun

josswallace wrote: »

Can you cali 4 years even though the yer residing in it is part of the last 3 years.

Yes - and I have done that before! - I have amended my post.

josswallace

From your calculation iy appers that the improvement/renovation costs can be taken off the gros profit before CGT is calculated. Can you confirm this, and many thanks for your input.

Ian Wallace