Selling now vs renting and CGT later

dericS

Hello,

I'd like some advice on experiences others have had. I am considering renting my property out.

I am in a dispute with my freeholder ATM hence why I cannot sell immediately but ultimately I intend to sell (within the next 2 - 5 year period).

My question is, what is the upshot on CGT if I rent my property out, move to other RENTED accommodation, and then sell once this dispute has been resolved?

Clearly I do not want to get caught paying more and ultimately this is my main residence but I feel I am forced out because of the various disputes with the freeholder.

If I manage to sell it immediately, I believe there is no CGT. Obviously this is tricky given the situation with my freeholder. What is the best way around this to ensure I am not losing out on any more money?

omariqy

Might be an idea to speak to an accountant to see how you could minimise CGT by planning ahead.

jimpix12

You only pay CGT if it's a second home, i.e. if you are "living" in both at the same time.

Unless you're unfortunate enough to have a snotty neighbour who knows the tax rules, HMRC won't know if you want to live in both for a short period either, just a pointer...

anselld

spunko2010 wrote: »

You only pay CGT if it's a second home, i.e. if you are "living" in both at the same time.

Completely incorrect.

You are *potentially liable* for CGT while letting, however there are significant allowances ...
Private Residence Relief for your period of residence plus the final 18 months of ownership.
Letting Relief
CGT tax free allowance in the year of sale (x2 if joint ownership)

If you do end up paying CGT it is not the end of the world because you will still be quids in. CGT is only 18% after the allowances for basic rate payers and 28% for higher rate.

Don't let the tax tale wag the dog; make the decision based on the real issues not the tax.

booksurr

spunko2010 wrote: »

You only pay CGT if it's a second home, i.e. if you are "living" in both at the same time.

Unless you're unfortunate enough to have a snotty neighbour who knows the tax rules, HMRC won't know if you want to live in both for a short period either, just a pointer...

so your advice is :

a) wrong
and
b) encouraging him to commit illegal tax evasion

OP has an interest in a second property (he is renting it) and as such does indeed have a second home since the rental property will now be his main home and the owned property will be liable to CGT since it is in reality no longer his main home. Won't need snotty neighbours for HMRC to establish the facts of that case and take the OP to court for evasion (a criminal offence).

dericS

Thank you everyone for your advice. I think I will follow the fist responder's advice and obtain some good tax advice so as to minimise any costs by planning ahead.