renting out your home and capital gains tax.

gibson1

Hello all,

I'm looking to buy a house for myself, and rent it out for the first year or so. I might live in it for the first couple of months, or until I find tenants via an agency.

Maybe I'll sell the property in 5 years, maybe more will see how life gos.

I was chatting to someone at HMRC today, who said that 18 months of renting a home, within any period of ownership, is free of Capital Gains Tax. Yet the HMRC website states that it is the last 18 months only that is exempt. Thoughts?

Also, I might be doing voluntary work for 2-3 months of the year overseas. Officially, I'd be on a tourist visa while overseas. I wouldn't necessary be letting the property during that time, and it would remain my official address. Would this count towards time not spent as a private resident if I were to sell the property?

Thanks.

Bluebirdman_of_Alcathays

Front line HMRC staff work in a call centre. They have some knowledge, but aren't qualified tax inspectors. The final 18 months of property ownership always have deemed occupation, and hence private residence relief.

Any period where you are overseas for employment counts as an exemption. I am unsure if voluntary work would be acceptable - I would need to dig out my Tolleys tax guide. But if I were a betting man, the fact that you were overseas working, and the fact your main "residence" would be the property would give you a very good chance of maintaining relief for that period.

In any case, in 5 years, given the reliefs available, you would need a whopping great gain to pay any tax anyway.

booksurr

chats are not the place to ensure that all relevant details are given. Tax is all about details which must be discussed in context....

the 18 month rules is the final 18 months of your ownership of a property which was, at any time during your ownership, your main/only home. There are hundreds of pages which explain CGT on the net, the best start point is HMRC themselves of course with Helpsheet HS283

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief

take note of the caveat on it: "But it is only an introduction". You will need to familiarise yourself with:
- the absence rules,
- the test of occupation as a main residence
- letting relief
to name but 3 detailed aspects, as ever the bible is HMRC's CGT manual, enjoy!!
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual

the main area to focus on is private residence relief (PRR)
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64200c

If you need help understanding do feel free to ask questions but please read it yourself because there is little point in asking us to write it all out again when it is there for the reading.

theartfullodger

You are talking about selling in maybe 5 years time: So you need to know what the CGT rules will be then. Sadly I am unaware of where these may be found: Anyone else know??

I have a crystal ball somewhere....

gibson1

Bluebirdman_of_Alcathays wrote: »

Front line HMRC staff work in a call centre. They have some knowledge, but aren't qualified tax inspectors. The final 18 months of property ownership always have deemed occupation, and hence private residence relief.

Any period where you are overseas for employment counts as an exemption. I am unsure if voluntary work would be acceptable - I would need to dig out my Tolleys tax guide. But if I were a betting man, the fact that you were overseas working, and the fact your main "residence" would be the property would give you a very good chance of maintaining relief for that period.

In any case, in 5 years, given the reliefs available, you would need a whopping great gain to pay any tax anyway.

Thanks. After a few hours on HMRC's website with a calculator, it is less than what I feared it would be it seems. If I were to sell after 10 years I would be paying something, but that's life/death and taxes...

gibson1

booksurr wrote: »

chats are not the place to ensure that all relevant details are given. Tax is all about details which must be discussed in context....

the 18 month rules is the final 18 months of your ownership of a property which was, at any time during your ownership, your main/only home. There are hundreds of pages which explain CGT on the net, the best start point is HMRC themselves of course with Helpsheet HS283

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief

take note of the caveat on it: "But it is only an introduction". You will need to familiarise yourself with:
- the absence rules,
- the test of occupation as a main residence
- letting relief
to name but 3 detailed aspects, as ever the bible is HMRC's CGT manual, enjoy!!
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual

the main area to focus on is private residence relief (PRR)
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64200c

If you need help understanding do feel free to ask questions but please read it yourself because there is little point in asking us to write it all out again when it is there for the reading.

Cheers for the link. A bit of reading to keep me going for a while.