cgt on 2nd home.

Smoothgrandad63

I currently own a 2nd house always been rented out, some 7 yrs, on a btl mortgage.
Tenant is behind with rent and is moving out. I want to move into the property whilst I renovate my main residence. Then sell the formally rented property, if I change all relevant paperwork to 2nd house , council tax, gas, electric all mail etc. How long do I have to be there if I look to sell and avoid some or all cg tax.
The plan the is to move back into original property once it is completed and sell that ..again same as before is there a time scale on cg tax

Cornucopia

The Tax Manual examples show 2 weeks to establish residence for this purpose, but obviously the longer, the better. You'll also probably need to tell HMRC what you are doing and when. (This is called an Election).

The rules at present then qualify the final 18 months of ownership for CGT exemption. You may wish to read the relevant HRMC note: https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2016

xylophone

Will you need to advise the BTL mortgagee that you are moving in?

Smoothgrandad63

Have sent email to mortgage company. Not very much mortgage left so should not be a problem

Smoothgrandad63

Many thanks for your info input, will check out link sent

Pennywise

Smoothgrandad63 wrote: »

How long do I have to be there if I look to sell and avoid some or all cg tax.

It's quality that matters, not quantity.

If you never intend it to be your main residence for the long term, then it will never count as such.

Even occupying it for several months may not guarantee main residence relief status if there was never any "permanent intention" to live there.

The "Moore" case is relevant - 8 months occupational but held NOT to have the "necessary degree of permanence, continuity or expectation of continuity" so was NOT his main residence and no main residence related reliefs available!

TC 02827
Appellant: Piers Moore
Respondent: The Commissioners for Her Majesty's Revenue & Customs
Chairmen / Special
Commissioners: John L WALTERS QC
Date Of Decision: 14/08/2013
Main Category: CAPITAL GAINS TAX/TAXATION OF CHARGEABLE GAINS
Main Subcategory: Exemptions and reliefs
Notes: CAPITAL GAINS TAX – disposal of a residential property after 8 months of
occupation – whether the property had been the appellant’s residence –
whether his occupation of the property had the necessary degree of
permanence, continuity or expectation of continuity – held on the evidence
that it did not – sections 222 and 223 Taxation of Chargeable Gains Act
1992 not applicable – appeal dismissed

If you plan from the outset to live there only temporarily and then move back to where you were, you'll fail the "intention" test and it won't count at all.

Smoothgrandad63

Pennywise wrote: »

It's quality that matters, not quantity.

If you never intend it to be your main residence for the long term, then it will never count as such.

Even occupying it for several months may not guarantee main residence relief status if there was never any "permanent intention" to live there.

The "Moore" case is relevant - 8 months occupational but held NOT to have the "necessary degree of permanence, continuity or expectation of continuity" so was NOT his main residence and no main residence related reliefs available!

TC 02827
Appellant: Piers Moore
Respondent: The Commissioners for Her Majesty's Revenue & Customs
Chairmen / Special
Commissioners: John L WALTERS QC
Date Of Decision: 14/08/2013
Main Category: CAPITAL GAINS TAX/TAXATION OF CHARGEABLE GAINS
Main Subcategory: Exemptions and reliefs
Notes: CAPITAL GAINS TAX – disposal of a residential property after 8 months of
occupation – whether the property had been the appellant’s residence –
whether his occupation of the property had the necessary degree of
permanence, continuity or expectation of continuity – held on the evidence
that it did not – sections 222 and 223 Taxation of Chargeable Gains Act
1992 not applicable – appeal dismissed

If you plan from the outset to live there only temporarily and then move back to where you were, you'll fail the "intention" test and it won't count at all.

Many thanks, not trying to do anything wrong , just trying to make all the hard work we have put in pay for itself

booksurr

Smoothgrandad63 wrote: »

Many thanks, not trying to do anything wrong , just trying to make all the hard work we have put in pay for itself

not suggesting you intend to do anything wrong, but the fact remains that your intention is to occupy a property for only as long as it takes for works to be completed on your "real" home. As such your occupation has no intent of making it a real home and will therefore fail to secure "Private residence Relief" and this an ability to claim the final 18 months of your ownership as CGT exempt.

Best you therefore prepare for the fact you will be liable to CGT on 100% of your gain and cannot get any relief other than your personal allowance.