Capital gains tax - single property

AB1706

Hi forumites,
My wife and I own one house. We lived in it for 8 years and have now rented it out for 7 years. We've been living with our son and his family, partly due to my disability.
We now want to move away which will involve selling the house and buying another.
Can I legally avoid CGT, we can move in for a period and if so how long?
Thanks in advance

saajan_12

AB1706 said:

Hi forumites,
My wife and I own one house. We lived in it for 8 years and have now rented it out for 7 years. We've been living with our son and his family, partly due to my disability.
We now want to move away which will involve selling the house and buying another.
Can I legally avoid CGT, we can move in for a period and if so how long?
Thanks in advance

CGT isn't just absolved because you live there at the start & end. It wasn't your main residence for your whole ownership period as it was rented for a significant time.

However there are a number of allowances, so it may end up being zero / low. If you give the below, we can help further:
* purchase price
* sale price
* buying / selling costs (agents / solicitors etc, not mortgage)
* capital improvement costs (not maintenance but if you say added an extension)
* Any other capital gains made this year (ie investments sold)

AdrianC

No, you cannot avoid CGT totally, but you do not pay it on the total growth in value.

You have owned the house for 15 years.
You have rented it out for 7 years, less 9 month taper period = 6.25 years = 41.67% of the time you owned it.

You are liable to CGT on 41.67% of the growth in value, less your annual allowance (£12,300 x 2 for joint owners).

So if the house has gained £100k in value, you pay CGT on £41,670 - £24,600 = £17,070.

Obviously, the precise number of months may vary from this example.

theartfullodger

You can easily evade CGT by genuinely selling (genuinely...) for an amount that means Capital gain is small so no CGT due.

There you go, Job done, I charge nothing for this advice.


Artful: Paid CGT on two properties in last couple of years (all genuine actual market numbers... )

Greymug

Why are people so selfish and always try to circumvent the law? It's there for a reason.

AB1706

Greymug said:

Why are people so selfish and always try to circumvent the law? It's there for a reason.

Sure, wealthy people always pay their fair share of tax. 
Amazon, Starbucks, MP's , billionaires and millionaires.

london21

Greymug said:

Why are people so selfish and always try to circumvent the law? It's there for a reason.

You will be amazed, some CEO's, directors etc pay less tax percentage than their cleaners, workers etc. Warren Buffet mentioned this also. 

Corporation tax is more favourable than income tax hence lots of people now buying properties using company than their individual name. 

Tax avoidance is legal but tax evasion is not.