Capital Gains Tax on Residential property

[Deleted User]

I wonder if anyone can help me with this issue?

I own a flat which I purchased in 1993 for £78,000. I have lived in the property continuously since then, over 25 years. It is currently worth about £225,000.

I now find myself requiring to live with my elderly mother who is in her 90's and requires my full-time care. I am proposing to move into my mother's property and to let out my own flat.

At some point in the future, I may return to live in my flat but the possibility remains that I will not return there but decide to sell it. At the moment I wish to keep a toehold in the property market while I attend to my caring responsibilities rather than to sell.

When I come to sell the flat (assuming that I don't die owning it) what will my CGT liability be if I have rented it out? I am aware that the rules are changing as from April 2020. Will it differ if I return to live in it as my sole or main residence before selling it than if I don't? Should I be taking the precaution of having the flat valued at the point just before renting it out?

Many thanks for any help.

Slithery

Deleted_User wrote: »

When I come to sell the flat (assuming that I don't die owning it) what will my CGT liability be if I have rented it out?

That all depends on what the rules are at the time you sell. They change every few years...

Should I be taking the precaution of having the flat valued at the point just before renting it out?

Unless the rules change drastically, then no. So far all CGT calculations are based on the purchase and sale price alone with no allowance for temporal variations in the market.

Sorry for the vague reply, but anything more would just be a guess unless you provide us with all of the relevant dates...

00ec25

CGT is based on the gain over the entire period you owned it. The gain is not affected by any change in the use of the property over that time. The gain is simply the selling price less the original cost less various buying and selling costs (and the cost of any capital improvements made to the property since purchase) less your CGT allowance.

The rules after 2020 are straightforward:
The gain is split into the % of time it was your main/only home and the % of time it was not.

gain multiplied by % applicable to non main home time = amount of gain subject to CGT

there are some further details I have left out, but fundamentally to answer your questions:
a) you do not need to get a valuation. That would be a colossal waste of money
b) moving back in will not negate the fact you owe tax for the time you did not live there. That can never go away as it is a tax on property for the time it was not your main home, simples.