Capital Gains Tax

lsjhoa

Hi All,

I wanted to ask if anyone know about Capital Gains Tax. I would like to buy a property, do it up and then sell it. Now I understand that I will have to pay CGT if it is not my main residence. But 2 things I wanted to ask.

1) How long would I have to live in the property to claim it as my primary residence, in order not to pay CGT?

2) If I were to put the money back into another project, i.e. buy another house, would I still have to pay CGT?

Thanks,

Lsjhoa.

TANZA_2

The law is vague about how long you have to live in the house-some people say only weeks is long enough. It really depends on the tax office. You have to register for council tax, direct your mail etc and really prove you are living in the property. You also have to declare it as your main residence to the tax office I think that if you sell it within 3 years of the declaration you can avoid paying capital gains-or at least gains on some of the time you own it. If you ring the tax office they will give helpful information on this.
You have to remember that the house you live in now will hten be subject ot capital gains while you are in the other house.
I don't know about buying another house as a project but I guess they will each be treated as liable for capital gains.

Doozergirl

What Tanza said, EXCEPT that the house you live in now would NOT be subject to CGT within three years of you moving out.

There is no set time period, you just need to show genuine reason. Moving on quickly again and again is going to ring the inspectors' bells.

I'm not entirely sure about your second question. I think if you plough it straight into something else, the tax is deferrred. You are still liable for it, certainly. Someone else will know better than me. Don't even know why I'm trying to answer!

scottp_2

To answer your second question: As for as I am aware, if you were to dispose of the asset (the house) and acquire a new one shortly afterwards you can use what is called roll-over relief, which means the tax is only chargeable once the final asset is disposed of. However, I believe this only applies to business not personal assets.
As others have said, your best bet would be to contact the tax office and ask them a hypothetical question and see what they have to say. Possibly speak to a few people there in case someone fobs you off with what you want to hear.

Hope that helps!

touch

When you buy your next project with the proceeds of your last you will not be liable for CGT on that money. You will only be liable for CGT if you make a gain which will be the difference between what you sell for and what you bought it for. (there are also other allowances but that's the principal)

Re the first point make sure you declare it as your residence otherwise you will be liable for CGT. the revenue do not specify a time period (that would be to easier for us mortals) but too short a period will be looked into.:j

Ian_W

Oh dear, oh dear.
I don't think most of the above is correct at all. If you're intending to "trade" in houses the good news is - don't worry about CGT ... the bad news is you'll be liable for income tax on the net profits!

I'd repost your query on the cutting tax threads where several accountants and at least one retired tax inspector post regularly but to answer your 2 questions best I can:
1. There is no time limit it's a factual test - was it your principle residence, so if you have a "real home" what you do with that might be looked at - but I've seen it suggested that at least 6 months and probably 12 months are most likely to get under HMRC radar.
2. Unless it's a business asset there is no roll-over relief and normally non-commercial property isn't a business asset but if you want to try to make it one see my first para.

If you're going to go into this I'd see an accountant to guide you as to the most tax efficient way to do it.

Doozergirl

It's 'cause you don't play on our board anymore Ian

Ian_W

_Doozergirl wrote:

It's 'cause you don't play on our board anymore Ian

Aw, but I still read as many of your posts as I can find. :kisses3:

Just can't be @rsed with the house price crash now or never arguments. :rolleyes:

Doozergirl

Sigh. We used to have such fun.

When we sat on the 'sofa' and shared drinks and popcorn with old Nmiah. I can't even remember what we were watching but we were there for days!

Ian_W

Doozergirl wrote: »

Sigh. We used to have such fun.

When we sat on the 'sofa' and shared drinks and popcorn with old Nmiah. I can't even remember what we were watching but we were there for days!

Ah but it was oh so different then
Has time rewritten every line
If you had the chance to do it all again
Tell me, would you?
Could you?

Nostalga it ain't what it was!

See I saw you and lynz et all with the lyrics!

Here in spirit - well usually dry white wine! :cool:

Doozergirl

You need to whistle too! I just downloaded that song - I started singing! As I pressed the button, realised that I have the exact album I downloaded it from, downstairs.

If I could just finish this bottle, I could go to bed. It's Pouilly Fumé and was opened yesterday. I cannot possibly waste it, even if it means I'm knackered tomorrow