CGT - Property Disposal Questions

Ada1

I understand that if I move in that if/when I sell any gain will be liable for CGT for the proportion of time that it wasn't my PPR. What I am concerned about would be whether the act of joining the flats back together would count as a disposal as I wouldnt want to pay CGT at the point I move in

booksurr

Ada1 wrote: »

What I am concerned about would be whether the act of joining the flats back together would count as a disposal as I wouldnt want to pay CGT at the point I move in

you need to wait for JIMMO the ex HMRC CGT Tax inspector to answer that one

Ada1

I'm tying myself in knots trying to work this out!

Done some more googling (dangerous...) and found an article that states the following.... does this mean that as I've owned the property but had a different PPR that I can;t now ever make it a PPR? That doesn't sound right.

We are so used to saying that the sale of a main residence is CGT-free that we are in danger of forgetting that there are two conditions for a claim to succeed:-

• The property must not have been purchased for the sole reason of making a profit (s 224(3)) TCGA 1992
• The property must be an individual's only or main residence throughout the period of ownership (s 222(1))

jimmo

booksurr wrote: »

you need to wait for JIMMO the ex HMRC CGT Tax inspector to answer that one

Clapton has already answered that in post #3 but just to make it clear for Capital Gains Tax purposes you own a single asset which is a piece of land together with the building (or buildings) which stands on it.
http://www.hmrc.gov.uk/manuals/cgmanual/CG70205.htm
It just happens that the building contains 2 flats.
In order to sell a flat you would need to create a lease which will take away your right of occupation and grant that right to the leaseholder. That would be a part disposal.
Converting the 2 flats into a single dwelling house is not a disposal.
It is simply altering the asset which you will continue to own.
The cost of conversion is enhancement expenditure which will be allowable in the Capital Gains computation when you eventually sell the house.

jimmo

Ada1 wrote: »

I'm tying myself in knots trying to work this out!

Done some more googling (dangerous...) and found an article that states the following.... does this mean that as I've owned the property but had a different PPR that I can;t now ever make it a PPR? That doesn't sound right.

We are so used to saying that the sale of a main residence is CGT-free that we are in danger of forgetting that there are two conditions for a claim to succeed:-

• The property must not have been purchased for the sole reason of making a profit (s 224(3)) TCGA 1992
• The property must be an individual's only or main residence throughout the period of ownership (s 222(1))

I would suggest you stop googling and spend quite a bit of time studying Helpsheet 283.
For PRR it really is all in there. You just need to take your time and get to understand it.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief

Ada1

Thanks very much - think I have things straight now.

The link to the factsheet and the confirmation about the possible building work not constituting a disposal are very useful.

Now have to go do some sums!

kidmugsy

You can always avoid CGT by dying. In other words, if you intend to spend the rest of your life in a property, you needn't worry about CGT caused by a spell when it was let.

Ada1

kidmugsy wrote: »

You can always avoid CGT by dying. In other words, if you intend to spend the rest of your life in a property, you needn't worry about CGT caused by a spell when it was let.

True... and part of the things I'll need to consider. I dont think that it's relevant if I ever live there in this scenario though, it could stay let till i pop my clogs I believe.