Capital Gains tax

ElaineBr

I purchased a property in London and lived in it for roughly 4 years and then went to work abroad and rented the property out. I had a normal mortgage not a buy to rent.  I then rented the property out for 12 years agin I did not switch to a buy to let and in fact paid off the mortgage during that period in full. My property has been empty for the last 12 months as I am selling and it is taking time to do so.  Once sold I will be purchasing a property to live in permanently again.
My question is do I need to pay capital gains tax on the profit from the sale or will I be exempt? I currently rent and live in a different property as I did not want to move back to the London property after returning from abroad.

AdrianC

You've owned it for 17 years or so.
You lived in it for 4 of those 17 years.
Yes, you pay CGT on the other 13 years, less 9mo transition = 12.25yrs.
12.25/17 = 72%
So you pay CGT on ~72% of the gain in value during your ownership.
Work the exact proportions by months, rather than full years.

The mortgage is irrelevant.
Your location is irrelevant (except for "not living in it").
Your future intentions are irrelevant.

If you'd moved back into it 12 months ago, you'd have had 12+9=21 months (~10% of capital gain) less CGT to pay. 

oldbikebloke

AdrianC said:

If you'd moved back into it 12 months ago, you'd have had 12+9=21 months (~10% of capital gain) less CGT to pay. 

not quite
the "final 9 months" is a "deemed" occupation period. Therefore, if physically living in the property up to date of sale, you cannot double count that period by adding 9 to the PRR calculation. 
If OP had moved back in 12 months ago then it would not be 12+9

peter12345678910

Also there is council tax to pay when the property was empty. 

oldbikebloke

ElaineBr said:

My question is do I need to pay capital gains tax on the profit from the sale or will I be exempt?

why ever do you think you can hold a property investment for 12 years and not be taxed in it?
It was no longer your main home and so for tax purposes, it is an investment subject to tax 

Just be grateful you are not selling it in the tax year during which you returned to the UK after having been non resident for tax purposes for so long. Your CTGT position would be different were that the case.

Your mortgage fraud is now ancient history, but did you take the same cavalier attitude to not declaring your rental income for UK tax purposes whilst living abroad?

tacpot12

Don't forget your need to calculate and pay the CGT within 30 days of the sale completing, so you are doing the right thing in making sure you understand the calculation now. Ideally, you will have all the proof of your costs of purchase from 17 years ago safely stored as you might need to show these to HMRC any time in the six years after the property sells. (You will also need to show your costs of sale). It is a bit of a mine field as to which costs are allowed to be offset in the CGT calculation and which are not, you need to research this carefully.  

SuperHan

Did your employer require you to move abroad and then another part of the UK? If so, you may be able to get a deemed occupation for the years you were unable to live there for work.

ElaineBr

oldbikebloke said:

ElaineBr said:

My question is do I need to pay capital gains tax on the profit from the sale or will I be exempt?

why ever do you think you can hold a property investment for 12 years and not be taxed in it?
It was no longer your main home and so for tax purposes, it is an investment subject to tax 

Just be grateful you are not selling it in the tax year during which you returned to the UK after having been non resident for tax purposes for so long. Your CTGT position would be different were that the case.

Your mortgage fraud is now ancient history, but did you take the same cavalier attitude to not declaring your rental income for UK tax purposes whilst living abroad?

I have been declaring rental income thank you and my actions are all above board.  I also continued to pay income tax on my salary as I was still classed as a UK resident.  I am just seeking advice on the property tax situation. 

thirtytoseventy

You can only claim PRR for your four years residence plus the 9 months at the end, assuming it's been vacant which it sounds like it has been. You may well be eligible for some Letting Relief too though. It isn't as generous as PRR but it is extra offset nonetheless, really depends on the figures as you are capped at 40k for this. And then there's your annual allowance too of course. I suggest using the calculator tool on gov.uk though, you can give it a test drive and you then download a PDF to submit with your declaration. If you have to check any info you can find it and go back and do it later. If you've held this property for 16 years in London then you are certainly looking at CGT one way or another.