CGT rented property non resident landlord

alphason

Hi,

Registered as a non resident landlord and have rented out my only property since Jan 2007, before this I lived in the property from the purchase time Feb 2002.

I have been advised by my letting agent that due to changes in Capital Gains Tax for non UK residents I should have a valuation of my property as of April 2015, if its sold CGT would only be payable on any gains from this date.

Also I think I should qualify for private residence relief for the time I lived in the property, and letting relief?

My agent has offered me a discounted valuation @210 but have found other RICS valuations available for less elewhere @120.

To complicate things I still receive a UK tax return with a UK address, (not sure if I should change this or its ok to keep this correspondance address) but I am properly registered as non resident landlord and receive rent without tax taken off by the agent. So I am not sure if I am being treated as non resident on my tax returns.

Can anyone help to give me any advice about what my CGT liability could be if the property was sold, is it recommended to get the valuation as my agent suggests?

Thank you.

booksurr

before the rule change a non resident owner could sell the property and not face any CGT at all irrespective of how long they owned it or when they sold

since the rule change the owner now faces CGT on the gain made AFTER 6 April 2015 ONLY

if at any time before or after 6 April 2015 it was the main home (there is a 90 day qualifying time if after April 2015) then you remain entitled to PRR
all explained here: https://www.gov.uk/capital-gains-tax-for-non-residents-uk-residential-property

In your case therefore... it ceased to be your main residence in 2007. You have been non resident since April 2015 so your CGT will be gain since 6/4/15 - 18 months PRR - personal allowance = net taxable gain. Ie until no earlier than Sept 2016 you will have zero CGT liability

the address for a tax return is effectively irrelevant, it could just as easily be that of your agent

your agent is obviously out to make money for themselves so has applied a margin to their quote. Cut out the middleman and go direct to a valuer of your choice as you must have cast iron evidence of the April 2015 valuation as it will determine your eventual exposure to CGT. Make sure you use a RICS "red book" registered valuer and consider getting more than one valuation so you can show HMRC that your figure was reasonable.
http://www.rics.org/uk/knowledge/professional-guidance/red-book

alphason

Thanks booksurr,

It look like getting a RICS valuation would be best thing to do, I can't really stretch to getting more than one though.

My agents normal fee is 270, and I probably would trust them the most to do this as we have a relationshp already. The lower quote for 120 is from a company that are not based in the same town, don't know if that would really matter but I don't want then to come in with a low valuation. Its only a small 1 bed property, I have had free estate agents valuations so am hoping this more official valuation would come in the same or better.

Do I need to do anything else now, like registering the valuation with the tax office?

Also if I am non resident would I still get the GCT allowance of 11k ish and can deduct expenses like mortgage interest, fees etc, and they would only count me as non resident for these purposes from april 2015 even though I left the UK in 2007?

Thanks.

booksurr

read the link I gave you

jimmo

I’m not sure you need to spend money on a professional valuation just yet.
Did you read about the time apportionment method in the link given by booksurr?
Given that you have 8+ years worth of ownership prior to April 2015 it may well be advantageous to you but the time to make that judgement will be when you are planning to sell the property, not now.
For the same reason, the time to decide whether you actually need a formal 2015 valuation is not now. Even HMRC say that (see “Valuations” in the same link).
If you do get a valuation now HMRC won’t be interested until such time as you sell the property and declare a taxable gain.

Spidernick

Another issue to consider is whether your intention is actually to sell the property while you are abroad. If you intend to relocate back to the UK and live in the property then, assuming you've gone abroad to work, it is very likely that the whole period of absence will escape CGT in any case and will, in effect, be added to the PPR period making the April 2015 valuation redundant:

https://www.gov.uk/tax-sell-home/absence-from-home

I think a lot of agents are using the new rules to try and make a bit of money on valuations, but these ar often not necessary.

As an aside, am I the only one who finds the www.gov.uk website very poor for navigating around?

alphason

jimmo - I have reread the ink and its a (little) clearer now. But would not most of the gains that have been made in the property occured in the pre recession years? Can you get an accurate caluation done in the future to show the valuation of April 2015.

Spidernick, at the moment no intention of selling, but you never know, the most likely reason would be if Interest rate went up to high as there is still a mortgage and i am not in a position to change mortgage provider. And yes I agree its hard to navigate around gov.uk which is why I was asking here again.

Thanks for all replies.

booksurr

alphason wrote: »

But would not most of the gains that have been made in the property occured in the pre recession years? Can you get an accurate caluation done in the future to show the valuation of April 2015.

doesn't matter when the rate of increase or decrease was highest - your CGT liability will be the total gain made over the whole period of ownership, split into exempt period and non exempt period based on occupation and letting. It is a smooth graph, not one full of peaks and troughs that allows you to sell in a trough

a qualified valuation surveyor will be very used to working out retrospective values, however, that will mostly be a desktop exercise as patently the condition of the building at the time cannot be inspected if the valuation is done years after the event. Afterall that is precisely what the Valuation Office Af#gency do on behalf of HMRC when you ask them to check your valuation on the Form CG34. Getting a valuation done by someone able to inspect it at or close to the valuation date will, of course, be more credible and "accurate" and may reduce the risk of a desktop value being too generalised and reflective of the area as a whole rather than the property itself

do bear in mind Spidernick's point about living abroad due only to work related reasons and then returning home. That would leave you with total exemption if this remains your only UK property and you re-occupy it

booksurr

Spidernick wrote: »

As an aside, am I the only one who finds the www.gov.uk website very poor for navigating around?

you are not alone. Since they converted to .gov the level of dumbing down of info on it is awful. Add in that the original HMRC pages are now difficult to find on simple searches and the overall "improvement" is negative as far as I'm concerned

alphason

doesn't matter when the rate of increase or decrease was highest - your CGT liability will be the total gain made over the whole period of ownership

So if the CGT is over the whole period theres no point in a valuation now? I thought it was just for the increases made after April 2015?

do bear in mind Spidernick's point about living abroad due only to work related reasons and then returning home

I have worked abroad but am not now, although I may do again if I get the chance. I have no plans to return but theres always a chance.

Thanks.