2nd home options vs. Capital Gains Tax?

plugh

We own our London flat outright, with no mortgage but can't sell it for 3.5 years or lose some of the discount we got when buying it. We have also just bought a second home in Wales, with a mortgage - one condition of the mortgage is that we can't rent it out. We can rent the London flat out. The London flat is worth more to sell (e.g. £150k) than the house in Wales, (e.g. £75k).

I have a decent job in London but it seems to me that we'd be better off if I find work in Wales and we rent the London place out - instead of now paying for two households.

What I'd like to find out about is if we move to Wales and rent the London place out, for the next five years. When it comes to selling the London place how much will we lose out to Capital Gains Tax and is there anything we can do to alleviate/mitigate this? Or would we better off staying in London, using the Wales place for holidays and then in five years selling both so as to buy something in Wales?

ViolaLass

Tried Google?

marksoton

plugh wrote: »

We own our London flat outright, with no mortgage but can't sell it for 3.5 years or lose some of the discount we got when buying it. We have also just bought a second home in Wales, with a mortgage - one condition of the mortgage is that we can't rent it out. We can rent the London flat out. The London flat is worth more to sell (e.g. £150k) than the house in Wales, (e.g. £75k).

I have a decent job in London but it seems to me that we'd be better off if I find work in Wales and we rent the London place out - instead of now paying for two households.

What I'd like to find out about is if we move to Wales and rent the London place out, for the next five years. When it comes to selling the London place how much will we lose out to Capital Gains Tax and is there anything we can do to alleviate/mitigate this? Or would we better off staying in London, using the Wales place for holidays and then in five years selling both so as to buy something in Wales?

Are you sure? Most RTB deals exclude you from letting for a term.

It's good to see the scheme has allowed another person to own multiple properties.

£150K property in London? Sounds very cheap to me....

Bluebirdman_of_Alcathays

Tax is all about detail and you've provided very little, so it's impossible to advise on if/how much CGT you'd pay. However, there are many reliefs available, so if you do end up paying CGT it would only be as a result of making a whopping great gain. With very few exceptions (transfer to a company, gifting to a family member etc.) there is always plenty of cash to pay CGT.


Your last sentence actually asks for tax planning - do not leave this to strangers on the internet, go and see an accountant.

booksurr

read this:

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

The definition of "home" is based a wide range of subjective factors. Having a job in London and a larger property in Wales that you use, for example, every weekend does not mean London is automatically your home if you have many more subjective ties to the Welsh property. London could just as easily be held to be a weekday crash pad and Wales is "home"

whichever is "home" will get Private Residence Relief for the period it was occupied as "home". PRR will cease the moment the property is let, although you would then get letting relief.

typically, and even for a London property purchased with a massive RTB discount, it will be a long time before a "home" property faces having to pay CGT on the London property.

read the link