Heads Up on new CGT regs for 2nd propeties

holly_hobby

Just a quick heads up that PRR in respect of previous occupants of 2nd properties, whereby the last 36 mths of ownership are currently CGT exempt, is scheduled to reduce to the last 18 mths with its implementation scheduled to take place from this coming April (ie APRIL 2014).

Lettings relief currently remains unchanged.

Apologies to those whom are already aware of this impending change.

Hope this helps

Holly x

Laurajo_2

Thanks for that....I actually missed that!

holly_hobby

No probs, I thought it worth highlighting in advance.

H x

chrismac1

Funny how they bury these sorts of changes in the small print, eh?

Savvy_Sue

Very useful, and potentially relevant ...

Gas_Powered_Toothbrush

chrismac1 wrote: »

Funny how they bury these sorts of changes in the small print, eh?

What should they have done? A full page advert in The Sun? Perhaps a 30-second commercial in the middle of Coronation Street?

zygurat789

Gas_Powered_Toothbrush wrote: »

What should they have done? A full page advert in The Sun? Perhaps a 30-second commercial in the middle of Coronation Street?

Budget notes, ootlars are both better, highliighting individual points.

PaulCooper

I was going to ask this question to Holly Hobby, but since you've started a thread I'll ask it quicker than I would've done without your prompt.
I own 2 properties, property A I've owned for 20 years and is our main residence, property B owned for a few months. At some point in time, we will want to make prperty B our main residence and sell property A, if we nominate property B as our main residence in March 2014, will I get 36 moths of CGT holiday on property A, or 19 months?
Second part of the question, assuming we made property B our main residence and failed to sell property A in the CGT holiday period what is the starting price of property A for CGT consideration, is it the price 20 years ago, or is it the price when it stopped being our main residence (plus holiday period)
Thanks
Paul

holly_hobby

PaulCooper wrote: »

I own 2 properties, property A I've owned for 20 years and is our main residence property B owned for a few months. At some point in time, we will want to make prperty B our main residence and sell property A, if we nominate property B as our main residence in March 2014, will I get 36 moths of CGT holiday on property A, or 19 months?

To nominate Prop B as your main residence, you MUST actually reside in it as your main residence, to which HMRC may request supporting data at any later PRR claim (ie your finanical and banking accounts and utility bills at the address from the date of residency, with typical utility use for a resident family, voters roll, address registered with HMRC as your contact, reg at local drs, etc, etc ... list not exhaustive)

As at APRIL 2014, and if the scheduled changes are implemented, which is v likely, you will at that point only have the last 18 MTHS as a PRR exemption (regardless of residency). So neither Property A nor Property B will qualify for the 36 mth PRR exemption if sold post implementation.

PaulCooper wrote: »

Second part of the question, assuming we made property B our main residence and failed to sell property A in the CGT holiday period what is the starting price of property A for CGT consideration, is it the price 20 years ago, or is it the price when it stopped being our main residence (plus holiday period)
Thanks
Paul

If you later sell prop A after moving out post April 2014, the taxable gain is the difference betwen the original acquisition price ie what you pchd it for 20 yrs ago,
LESS the period when it was your primary residence PLUS an additional 18 mths
LESS any (documented) improvement costs (but NOT general maintenance)
LESS acquisition and disposal costs (inc professional fees, but not those connected with any CGT submssion)
LESS any previously reported CGT losses
LESS (if let out) lettings relief (max relief of 40k per benefical owner, can expand on the actual computation details if reqd)
LESS unused CGT allowance of each beneficial owner (currently £10,900 pp 2013/2014)

With any residual gain taxed at 18% for a non or basic rate tax payer OR 28% for a higher rate tax payer.

Hope this helps

Holly

PaulCooper

Hi Holly
Many thanks for the comprehensive reply, I'm OK with the definiton of when something becomes the main residence, for us it's just a timing thing as to when we move.
Do you know if we change residency in March 2014, will we still fall under the rules of 36 months & not the 18 months if we change our main address in April.
Thanks again
Paul

chrismac1

It's worth noting that for the three disposals I've done in the past 6 months the impact of this change would have been:

zero zero just over £2.5k

The first two had lived in their property for more than half of their period of ownership. I have a little "quick and dirty" calculator where you just plug in the figures, it can show you the effect of the changes. PM me for a copy.

There is not much point in rushing to sell a property in a sellers' market just to save tax if in fact the tax impact would be zero.