Capital Gains Tax on residence

MumOf2

Hello

We are living away from our principal residence at the moment.  At the moment, our youngest child is living there whilst he does his postgraduate training.  The period we will be away will be about 18 months, then we'll go back for a while with a view to tidying up, decorating and selling (probably about four months?).

My understanding is that as long as we're away for less than three years and we return for a period of time prior to selling, any gain is not liable for CGT.  Does anyone know if my understanding is correct?  Is there a minimum amount of time you have to return to fulfil the criteria?

Thanks in advance.

MumOf2

Jeremy535897

The rules are explained in https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2021

"Certain other periods of absence from your dwelling house may be treated as periods of residence if both before and after the period there’s a time when the dwelling house is your only or main residence.

If you’ve another dwelling house eligible for relief, for example a house or flat which you bought or rented as your home while absent, you will need to make a nomination in favour of the original dwelling house, if you want the period of absence to be treated as a period when that house was your main residence. See section about only or main residence.

The qualifying periods of absence are:

a. absences, for whatever reason, totalling not more than 3 years in all
b. absences during which you’re in employment and all your duties are carried on outside the UK
c. those absences totalling not more than 4 years when either:

• the distance from your place of work prevents you living at home
• your employer requires you to work away from home in order to do your job effectively

You will keep the exemption for absences b and c if you cannot return to your dwelling house afterwards because your existing job requires you to work away again. The absences at b and c will also apply if the employment was that of your spouse or civil partner.

MumOf2

Thank you, Jeremy.

MumOf2

Jeremy535897

You asked whether there was a minimum amount of time that you have to return for, and the answer is no, but too brief a time may be provocative. A couple of months should suffice, and getting on the electoral roll there and having post delivered there all helps.

If you own the property you currently live in, nominating the first house will automatically preclude that period of ownership of this second property from qualifying as a main residence. You also have only two years from the date the second property was acquired to nominate the first house. If the second property was rented, there can be no gain on it, and you can nominate the first property to be your main residence even if you have been renting the second for more than two years. If the second property is rented, it would be advisable to cease renting it before the first property is sold, as it then becomes much harder for HMRC to argue that the first property has not returned to being your main residence.

MumOf2

Thanks again, that's really reassuring.  From what you say, this will work out fine.

MumOf2