Capital Gains tax on former permanent residence

je123

I would be grateful for some advice.  I bought my house in 2006 and am looking to move into a house I just bought with my boyfriend (after renovations).  I don't know whether to sell my current house now or to keep it and rent it out (I have looked at this as my retirement fund, as my current pension pot will only give me £4K a year - at the moment and still have 24 years until I can claim state pension).  My question is.... if I decide to rent for a while and then sell it will I have to pay capital gains tax from when I first bought it in 2006?.  As it has greatly increased in value since then ~£80K. Or can I get a valuation done on the property prior to renting and only pay the tax on any increase from this date? I have looked at the government website and I can't get my head around a straight answer.

[Deleted User]

Let’s say you move out today and sell it in two years time. 

You will have owned the house for 19 years which is 228 months. It was your main residence for 17 years, 204 months and you can add 9 more months as it was your main residence at some point - 213 months private residence relief. 

You work out your gain (sale price less cost price less improvement costs less costs associated with purchase and sale) - 213/228 of that gain would be exempt. You would deduct your annual exemption which is currently 12300 but is about to decrease to 6000 and eventually 3000. 

This may be a factor in your decision.

(edited as I’ve just remembered that we’re in 2023!)

Jeremy535897

Gains on houses are always time apportioned. The value when you move out is never relevant. You would have to crystallise the capital gain by selling it, or giving/selling it to your boyfriend if you want to keep it as a couple. If you did that within 9 months of it ceasing to be your main residence, and it was your main residence from the date you bought it, the gain would not be taxable. You have to have a lot of trust in your boyfriend! Owning two houses does have stamp duty implications too.

je123

Thank you for the replies, that makes sense now.  By all means I am not wealthy and worked hard  6 days a week for what I have gained, so loathe to pay more tax than I have to as this is my pension pot.  Unfortunately the government doesn't see it that way, otherwise I will be on the breadline without it when I come to retire!