Tax liable if I own but rent elsewhere?

kcseb

Hi all

I rent in an area of the Southeast that is too expensive to buy in (I stay here for commuting + family reasons): however I've bought a couple of BTL properties so that I'm not left off the proverbial ladder, in a MUCH cheaper area east of London.

I know you have no capital gains tax on your primary residence yet do on a second home. But how does it work with someone like me who rents himself, but owns one more than one BTL? Do I get tax relief on the first of the BTLs, even though it's not my primary residence?

Thanks in advance!

buglawton

You get taxed to bits, taxman makes no allowance for situations like yours and in general the UK tax regime is very anti job mobility.

Expect to pay income tax on your BTLs and capital gains tax when you sell.
Yet it's adaptable people like you that govt policy should be encouraging.

oldbaldman

have you declared either of the BTLs as your PPR at any time?

obm

AdrianC

kcseb wrote: »

I know you have no capital gains tax on your primary residence yet do on a second home. But how does it work with someone like me who rents himself, but owns one more than one BTL? Do I get tax relief on the first of the BTLs, even though it's not my primary residence?

No, because neither of them are your residence. It really is that simple. Nobody pays CGT on the house they own and live in. You don't own your residence, so it's a non-issue. Properties you don't live in are subject to CGT. You have two such properties.

You need to view the BtL properties as very separate from your own personal accomodation. They're nothing whatsoever to do with it - where you choose to live is not part of your lettings business, and your lettings business is separate from your personal life.

G_M

You own two properties.

Neither of them is your primary residence.

You will be liable to Capital Gains Tax on both.

You will also be liable to income tax on the rental income from both.

kcseb

oldbaldman wrote: »

have you declared either of the BTLs as your PPR at any time?

obm

Hi obm - nope I haven't. One of them I was going to live in (it's a resi mortgage that they eventually gave consent to let) and was sort of living between there and my current rented home, before I let it out when I decided I couldn't move because of work/family.

oldbaldman

You need some advice to maximise your allowances. Not from any old bald man or others on the internet.

obm

kcseb

Ok thanks Obm, noted!

kinger101

kcseb wrote: »

Hi obm - nope I haven't. One of them I was going to live in (it's a resi mortgage that they eventually gave consent to let) and was sort of living between there and my current rented home, before I let it out when I decided I couldn't move because of work/family.

OK - first, get the income tax position sorted asap. Tax evasion isn't good. You might get a very severe penalty, or at worse, get free accommodation at her majesty's pleasure.

If you have at one point lived in the property, you may be entitled to some principle private residence relief, and letting relief. The fact you've lived there while renting somewhere else might cast doubts on whether you qualify for PPR, but perhaps the fact you had a residential mortgage initially may help in that respect.

See here for more details;

http://taxaid.org.uk/guides/information/other-taxes-you-may-need-to-know-about/capital-gains-tax/selling-our-main-private-residence