Capital Gains & PRR

Julfulbub

After a bit of research I can see that you are allowed to rent out your home for up to 3 years for any reason and up to 4 years if you have moved into job related accommodation before becoming liable for Capital Gains. What I cannot find a firm answer to is, can these be combined to give you a 7 year exemption? It also talks about the job related accommodation being extended to spouse or civil partner, does this mean you have to be legally married?

My situation is not married, but we have been together for 25 years and had a mortgage together for 16 years. Our current house we bought in Dec 2009 and we moved out in March 2018 as my partner took a job managing a pub/restaurant which requested he live on site. We are approaching the third year of renting out the house so I am beginning to think about the impact of Capital Gains. 

At the moment he has no plans to leave his current job so I don’t know how long our current situation will continue but I feel the longer it goes the balance of exempt years of owning the property will begin to tip and we may have a big bill if we decide to sell in the future and I just need to understand how exactly this works so I can plan. 

silvercar

Always risky to plan for the future as none of us know what rules will be in place at the time you do decide to sell.
That said, you can consider the home your PPR if your employment or those of your spouse or civil partner is obliged to live in work accommodation. So you would have no relief, so may have a CGT liability for the time you didn't live in the property. But you would have a CGT allowance to put against this and your share of the CGT would be whatever portion you own of the property (half?)
*amended when I realised it is your partner's job not yours that would give the entitlement

Julfulbub

I realise the future is uncertain and there has been so many changes with regards to rental properties in recent years but better to keep up to date and take a view than bury your head in the sand which is what I meant by plan. 

I don’t really understand your response if I’m honest. You are allowed to rent your home for up to 3 years and claim PPR and up to 4 if you are in work related accommodation so I don’t know why you would say my partner would get no relief. 

ProDave

I thought PRR has now been reduced to just the period you occupy the house plus the last 9 months.

So you only get 9 months "free" while it is let, not 3 years.

Of course depending how much it rises the gain may still be below your capital gain tax allowance, which is doubled if the property is jointly owned.

Julfulbub

I know the final exemption period was reduced from 18 months to 9 months but I haven’t seen anything to say the allowances for being away from your home are no longer allowed. Where did you see this?

silvercar

Julfulbub said:

I realise the future is uncertain and there has been so many changes with regards to rental properties in recent years but better to keep up to date and take a view than bury your head in the sand which is what I meant by plan. 

I don’t really understand your response if I’m honest. You are allowed to rent your home for up to 3 years and claim PPR and up to 4 if you are in work related accommodation so I don’t know why you would say my partner would get no relief. 

I read it the wrong way round, it is You that wouldn't get the entitlement not your partner.  Your are not obliged to live in work related accommodation, nor is your spouse or civil partner (as you are not married), so you don't have that entitlement. If you were married or if your employment required you to live in work related accommodation then you too would have the entitlement.

Sibbers123

The 3 and 4 year periods you mention require you to move back to the property before sale. If you do not reoccupy the property, it is just the 9 month period that will be apply.

there are rare exemptions to this presumption, but you don’t provide enough information. See a tax adviser.

Julfulbub

I did think not been married would be a problem, makes you die though that for other purposes like the higher income child benefit cap being married is not a prerequisite. We are financially tied and have a family so just because we are not married does not mean we are going to live separately. 

So I would only have a 3 year leave on my share of the house but I guess I need to speak to someone in the know to find out if he would get his 3 years plus the 4 on his share. I do realise we have an obligation to move back into it and no doubt we will at some point. Although I did read somewhere that if his job requires him to continue living onsite and circumstances changed that we didn’t move back he could still claim the allowance. 

silvercar

I don't know where your 3 year renting for any reason comes from. Do you have a source?

oldbikebloke

silvercar said:

I don't know where your 3 year renting for any reason comes from. Do you have a source?

period of absence rules 
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65040

Use of residence during period of absence
It does not matter how the residence is used during a qualifying period of absence. For example, it may be let without any loss of relief.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65050

Julfulbub

Thank you for taking the time for sharing your knowledge oldbikebloke, I know I need to seek advice pertaining to our personal circumstances to fully understand the situation, which I will do. 

You have given some good for thought and some of what you have said has confused me. You are right it is not a tenancy and no we do not have any legal interest in the accommodation because it is service related. To this ends I understood that our home that we let out is our only property so we do not have to nominate it. Even if I am not covered by the job related accommodation because of the lack of the ring in my finger I should be covered by the 3 years for any reason. I could go and book a registry office for next month and that would take care of that problem. I know I  probably missing something in all the links you have posted that make reference to other clauses which you have to search for as opposed to just clicking a link so I am not piecing it all together coherently to follow your train of thought. 

On the marriage note I know we are treated as individuals for tax purposes. I have my own employment and do our tax returns on the house. I have no problems with that. The point I was making was they say we have to be legally married for me to make a spousal claim but they make it clear that marriage is not important when they impose the high income child benefit charge on you. It just seems like a contradiction of the terms put upon a family but that I guess is their prerogative and we are here to suck it up.