Selling only property but never lived in it

Agw_2

Hi me and my husband brought a property in January 2017 that we renovated completely to live in. All this time up to current date we have been living in rented accommodation. We have now finished the property but have decided that we don’t want to move in because we don’t like the area now that we have got to know it.
What is the best way to sell it for minimal tax because even though we brought it to live in we never have, so don’t think that we can get it Private Residents Relief, or can we. Would like to get it for as little Tax as possible because still got to buy a house to live in. (Don’t want to be rented for ever).

Thanks

AnotherJoe

Buying price?
Likely Selling price?
Amount spent on renovation and solicitors fees ?

Tom99

CGT I expect, unless HMRC think you intended to do it for profit the it would be income tax

Keep_pedalling

Tom99 wrote: »

CGT I expect, unless HMRC think you intended to do it for profit the it would be income tax

Sounds more like the latter. Whatever the original intention was in reality this now looks like a straight forward business transaction.

Simple solution move in for a year or so then move to somewhere new, the area can't be that bad otherwise you would never have bought it in the first place.

00ec25

you are correct that you cannot get private residence relief as you have to actually occupy in order to qualify for that (unless very specific circumstances exist, such as one of you being a member of the armed forces)

you will be "lucky" if you "get away" with being assessed for CGT given, as per the post above from keep pedalling, on paper you look more liable for income tax as property developers

if you go down the CGT route, and assuming you jointly own it, are you really intending to sell for a gain of more than twice your CGT personal allowances (+ buying and selling costs of course)? Take a big profit and again you will look like developers ...

Agw_2

Purchase price £70,000 at auction
Solicitors fees etc £2500
Renovation costs approx £12,000
Selling price £97,000
Solicitors fees etc £2200

00ec25

Agw wrote: »

Purchase price £70,000 at auction
Solicitors fees etc £2500
Renovation costs approx £12,000
Selling price £97,000
Solicitors fees etc £2200

let us assume that your definition of "renovation costs" will not comply with HMRC's definition of capital costs otherwise you'd have spent more than 12k

so "you" have a gain of 22,300 net of legal fees. Assuming it is joint ownership you have 22,600 of personal CGT allowances. (11,300 each). Net effect zero

as said if you "get away" with a CGT declaration you will have done very well.

chappers

Also on the back of that do you both work and if so what rate do you pay tax at?

G_M

Agw wrote: »

.......we don’t want to move in because we don’t like the area

.... we brought it to live in

Bring it to a different area which you like?

Like others, I suspect it's Income Tax that applies, but you might get away with Capital Gains Tax, which on those figures appears to be zero (though a declaration still required).

Agw_2

I am a housewife and my husband is a labourer. I did most of the work while my husband was at work.

00ec25

Agw wrote: »

I am a housewife and my husband is a labourer. I did most of the work while my husband was at work.

ok,

so the key question is: does your husband already have to submit a tax return? Is he, for example, self employed under the Construction Industry Scheme?

if yes then he must declare the sale and therefore he must "choose" either claiming it is a sale subject to CGT or subject to income tax. One is more truthful, the other means no tax but a risk if he is questioned.

I'll assume your position as "housewife" means you are not already required to do a tax return but if he has to do one then you will have to do as he does - CGT or income tax, "your" choice.