Two properties into one - CGT Implications

HAIRY_MCLAIRY

Hi,
My husband and I bought our semi bungalow 10 years ago and it has been our primary residence ever since. Three years ago we bought the other half of the semi, and this has been rented out. We now have buildings consent to make the two properties into one. Can we still let off part of the 2nd semi, ( to the same tennant) and still claim the whole lot as our primary residence to minimise CGT when we sell, in say 2 years time?

Any ideas, please?

Elaine_Wilson

Not quite. The position depends on whether the tenant will still be in occupation up to the time you sell.

Your sale (of one property) will fall into three parts.

First, the part which has always been your own residence. This will attract total exemption.

Second, the part which was let out until the properties were joined and from then on occupied as your residence. The gain here will be apportioned but note that the last three years will be exempt even if the period of occupation is less than this. Lettings relief will also apply.

Third (if relevant), the part which was never used as your residence. No PPR exemption or lettings relief would apply.

So, make sure that at some time before you sell the whole of the property has, at some time, been used as your residence.