Minimising Capital Gains

aetius

Hi,

I currently have a buy to let property, which I've put on the market.

I want to minmise the tax on capital gains before I sell. I'm thinking of moving in for a while (I'm currently living with my parents) and getting an incoming calls only landline, how long do I have to live in the property before if qualifies as my main home?

If I simply didn't notify the HMRC of the sale, how would they know?

Thanks

00ec25

it is a popular urban myth that there is a magic duration of occupation beyond which you gain CGT relief. This is not so.

The actual test of whether it was/is your main residence is a test of the quality of your occupation of the property not simply how long you "lived" there.
The test can be very intrusive as it seeks to establish, for example:
- do you commute to work from that property
- does the rest of your family live there
- where do the kids go to school
- where is your social life based in relation to that property
- does all your correspondence go there
- electoral roll (remembering this is a legal requirement)
- would your friends expect to be able to contact you there if they phone/visit
- which address do you quote in casual conversation
AND
- how long have you lived there

to quote HMRC instructions to their own staff checking claims:
Whether a dwelling house is a residence of the individual is a question of fact. The length, quality and circumstances of the occupation should be considered particularly where the dwelling house has been occupied for a short period. For further guidance see CG64420+.

http://www.hmrc.gov.uk/manuals/cgmanual/cg64420.htm
http://www.hmrc.gov.uk/manuals/cgmanual/CG64545.htm

aetius wrote: »

If I simply didn't notify the HMRC of the sale, how would they know?

Please do not ask for advice on how to commit tax fraud - HMRC are notified of all sales - they WILL know as soon as you sell it

tim123456789

aetius wrote: »

Hi,


If I simply didn't notify the HMRC of the sale, how would they know?

Thanks

Your solicitor will tell them on pain of being ""struck off" if he doesn't. Don't even think about him not doing this.

Of course, if you diy conveyance, you wont have this problem :rotfl:

tim

DrPepper123

this is something I want to look in to. What is the criteria for paying CGT on rented properties? Do you have to be making a certain amount of profit on the sale before you pay any tax?

00ec25

DrPepper123 wrote: »

this is something I want to look in to. What is the criteria for paying CGT on rented properties? Do you have to be making a certain amount of profit on the sale before you pay any tax?

http://www.hmrc.gov.uk/cgt/intro/basics.htm

happy to explain further once you've read the basics

aetius

Thanks for the feedback.

I've been doing a fair amount of refurbishment work on the property in my spare time, is this something I can put down as a cost?

If I pay a painter or decorator to work, it would be a legitmate cost, can I therefore use a reasonable rate to put my own costs down?

tim123456789

aetius wrote: »

Thanks for the feedback.

I've been doing a fair amount of refurbishment work on the property in my spare time, is this something I can put down as a cost?

If I pay a painter or decorator to work, it would be a legitmate cost, can I therefore use a reasonable rate to put my own costs down?

no, you can't make up a value for your own time, as a cost

00ec25

aetius wrote: »

Thanks for the feedback.

I've been doing a fair amount of refurbishment work on the property in my spare time, is this something I can put down as a cost?

If I pay a painter or decorator to work, it would be a legitmate cost, can I therefore use a reasonable rate to put my own costs down?

are they genuinely improvments to an existing asset or are they simply repairs of it. The first is capital, the second is revenue so in addition to what tim said about costing the work (you can claim materials not labour), it may not be allowable for CGT anyway

chappers

tim123456789 wrote: »

Your solicitor will tell them on pain of being ""struck off" if he doesn't. Don't even think about him not doing this.

However it is up to you to to complete your tax return and declare your gains.
I am certainly not condoning tax fraud, but they might not check up or find out.
My brother in laws tax affairs have been a mess for years, two years ago he decided to put his affairs in order and laid it all on the line with HMRC which included a property he had developed and sold a few years before and was definitely subject to capital gains.
They said that the deadline for filing for that year had passed so he couldn't file a return to include that transaction., but that the late penalties would have to stay and that was the end of it