"Flipping" house

spanport

I have two houses. My main home and a holiday home. My main home is worth a lot less than my holiday home. I have read about MPs "flipping" houses and I am wondering how to go about this as I am thinking of selling my holiday home and if I flip houses then I will possibly not need to pay CGT. Any Ideas?

CLAPTON

spanport wrote: »

I have two houses. My main home and a holiday home. My main home is worth a lot less than my holiday home. I have read about MPs "flipping" houses and I am wondering how to go about this as I am thinking of selling my holiday home and if I flip houses then I will possibly not need to pay CGT. Any Ideas?

you have two years from the time to acquire the second home to choose and declare to HMRC which you wish to be you principal private residence PPR.
If you don't do this within 2 years then it become a matter of fact i.e. which one do you spend most time in, where does your mail go, which one do you use for banking etc.

Flipping doesn't necessarialy mean you pay no cgt but can reduce it

kidmugsy

MPs typically had two houses, one in the constituency, one handy for the HoC; they would typically spend a fair part of the week, and of the year, in each. So there was an opportunity for them to fiddle about with the choice of which was their PPR. Are you in a comparable position?

spanport

kidmugsy wrote: »

MPs typically had two houses, one in the constituency, one handy for the HoC; they would typically spend a fair part of the week, and of the year, in each. So there was an opportunity for them to fiddle about with the choice of which was their PPR. Are you in a comparable position?

I have had 2 houses for about 9 years now and I spend approx half my time in each. The house I regard as my home is the one I have occupied for about 20 years. The one I regard as my holiday home I bought about 9 years ago. I never thought about CGT at that time but now I am thinking of selling my "holiday home" I am looking for ways of reducing CGT liability

booksurr

spanport wrote: »

I have had 2 houses for about 9 years now

so you are 7 years too late to make a nomination, therefore which is your main residence is a test of "matter of fact"
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64435

spanport wrote: »

and I spend approx half my time in each. The house I regard as my home is the one I have occupied for about 20 years.

so you have answered your own question, your home is your home

spanport wrote: »

The one I regard as my holiday home I bought about 9 years ago. I never thought about CGT at that time but now I am thinking of selling my "holiday home" I am looking for ways of reducing CGT liability

you have 3 options:

a) take the hit on the chin and simply do nothing except claim your personal allowance (£11,100) and pay CGT on the net gain remaining after that has been deducted

b) make your wife a co-owner so that the gain is split 50/50 and she can use her personal allowance (of course you haven't said if you have a wife so....)

c) move out of your "home" and into the "other" property IN REALITY and live there in such a fashion that it becomes indisputable that it is now your actual home. Then sell within 18 months of doing so otherwise the whole exercise is pointless. The purpose being that a main home entitles you to an automatic disregard of the final 18 months of ownership when calculating the CGT liable period so say you live there for a year you would acquire 1.5/(9+1) exemption on your gain, ie out of 10 years ownership 15% of the gain would be exempt from CGT. Please be aware it is hard to make such a claim stick in reality as HMRC are not fools when it comes to why did you "suddenly" do that after 20 years of living elsewhere

kidmugsy

I gather that letting a house for "holiday lets" is now more tax-efficient than letting to ordinary tenants. Could you consider this?

PennyForThem_2

You may have another option which is putting the 2nd home into a Trust - certainly an option that was put to me but which I am thinking is not to my taste.

PM me if you want more detail but I am a punter not an advisor.

silvercar

Buy a third house to re-start the two year "clock".