CGT on Second property, too late?

splodge2001

I bought a second property in Sep 2011 on a BTL mortgage. It has been rented ever since.

The idea was that I'd continue to live in my current flat until I could afford the mortgage on the second flat.

I didn't apply to have the second property considered to be my primary residence as I thought I would have to sell my current property within 3 yrs and live in the second. Since I couldn't guarantee either of those things I didn't do it.

I'm slightly kicking myself now as it appears that following the 3 yr period I could have simply switched primary residence again and benefited from 3 years CGT exemption on the second property.

Anyway, given that I missed the boat on the primary residence flip. I'm wondering what to do to minimise my CGT exposure, should I sell the second property. In addition, is there any taper relief if I own the second property for a long time?

Spidernick

As I understand it you cannot elect for a let property to be your PPR. You also cannot chop and choose your PPR at will: you get two years from the time there is a change in your 'interest' in a property, which can include renting a property from someone else.

The 36 months has now been reduced to 18 months.

You could live in the let property and let your current home. This would then give you letting relief of up to £40K on both properties when you come to sell and give you the 18 month extension in respect of your current PPR (as this is supposed to allow time for selling at the end, which wouldn't apply to your currently let property if you lived it it and then sold it while it was your PPR).

CLAPTON

splodge2001 wrote: »

I bought a second property in Sep 2011 on a BTL mortgage. It has been rented ever since.

The idea was that I'd continue to live in my current flat until I could afford the mortgage on the second flat.

I didn't apply to have the second property considered to be my primary residence as I thought I would have to sell my current property within 3 yrs and live in the second. Since I couldn't guarantee either of those things I didn't do it.

I'm slightly kicking myself now as it appears that following the 3 yr period I could have simply switched primary residence again and benefited from 3 years CGT exemption on the second property.

Anyway, given that I missed the boat on the primary residence flip. I'm wondering what to do to minimise my CGT exposure, should I sell the second property. In addition, is there any taper relief if I own the second property for a long time?

you can only nominate which of two properties is to be considered as your primary residence where you genuinely live in both e.g. a town flat for the week and a country house at the weekend.


A property rented out can't be your primary residence as you don't live there.


and the last 36 month rules is now the last 18 month rule
and there is no taper relief.


to reduce the cgt on your second property you could genuinely move in and so it will then be factually your PPR;
you could then benefit from PPR and letting relief


you would have 18 month to sell the first property without incurring any cgt (well a bit more depending upon the price etc as you also have 11,000 cgt annual allowance).




what do you intend doing?
do you wish to keep or sell the first property or let it ?
and what do you want to do with the second flat?

splodge2001

Is letting relief effective as a CGT allowance or is it a figure to be deducted foe income tax purposes?

CLAPTON

splodge2001 wrote: »

Is letting relief effective as a CGT allowance or is it a figure to be deducted foe income tax purposes?

letting relief reduces cgt as does primary residence relief and of course cgt allowance of 11,000

booksurr

splodge2001 wrote: »

Is letting relief effective as a CGT allowance or is it a figure to be deducted foe income tax purposes?

irrelevant

you have never lived in the rental property as your main home therefore a) cannot quality it as you PPR and b) as a result of a) you cannot claim letting relief