Main Residence -Hows is this defined ?

ahll

Hi,
Over ther years I have heard rumours that if you buy a house do it up and live in it for 12mnths it is classed as your main. So when you sell it you get to keep all the money without being taxed on it.

Does anyone know of this it true or is it that as soon as you buy it, it can become your main residence and it doesn't matter when you sell it.

roger56

If you have 2 homes you need to give Notice under Section 222 5(A) TCGA 1992 to the Inland Revenue.
Basically you can make another house your main residence for a period then revert back to your other property. You have to be able to show you lived in the house as your main property (typically if you need to work away for a period). Keep receipts and other info. That way CGT can be minimised.

Pennywise

BUT if you make a habit of it and do it, say, every 2 years, the IR would have every right to argue that you are "trading" in property, in which case the properties become trading assets and the profits are trading profits - i.e. it comes outside capital gains tax so the capital gains tax exemptions would not be available. Be very careful to make sure that you have reasons other than a profit motive - i.e. growing family, change of jobs to different area, moving for better schools, etc etc - if you can't prove another intention other than profit making, your tax could be very high indeed.