Another capital gains tax question!

samtosh

Hi I am new to this site, I hope I am in the right forum.

I am an expat, working and paying tax overseas. I have 2 properties in the UK.
I purchased the 1st property 5 years ago, rented it out and have never properly lived there.

I purchased the 2nd property 1 year ago, rented it out and have never properly lived there. I purchased it for 300K, and I expect it to be worth about 310K now. there is 30K left on the mortgage.

I now want to buy a third property to live in myself in the UK, and expect to pay 250K.
I want to sell property 2 in a few years time to reduce the mortgage on the 3rd property.

will I be liable for capital gains tax? if so how much? is it avoidable?

EdInvestor

samtosh wrote: »

I am an expat, working and paying tax overseas. I have 2 properties in the UK.I purchased the 1st property 5 years ago, rented it out and have never properly lived there.[/quoyte]

If you sell this before you return,no CGT is payable, as you've lived abroad for 5 years.

I now want to buy a third property to live in myself in the UK, and expect to pay 250K.

This property will become your Principal private residence so should be CGT free when you sell.

I want to sell property 2 in a few years time to reduce the mortgage on the 3rd property.

The net profit on this property would be subject to CGT @18% under the new rules, with no reliefs other than the 9,200 annual CGT tax free allowance, but if the gain is only 10k that would cover it after costs.

Bear in mind that if you moved into property 2 for a while, you would then be entitled to the final 3 years' CGT free, along with letting relief for a former PPR.If the value of the property rises a lot this would be worth considering on your return, with a view to occupying property 3 after property 2 is sold.

samtosh

Wow! you're good!
lots to think about there, I thought I was totally done for...thanks a lot.
got any more info on this 5 years abroad? is that non resident for 5 years?