Capital Gains Tax - Exceptional Circumstance

riggersssss

I was wondering if there is anyone here who might have knowledge on the below, as it seems to be quite confusing and convoluted.

I have owned an apartment since 2014 and it was my main residence until 2019 when my wife and I decided to sell up, and buy a house due to having a family.

Half way through the conveyancing process, the sale fell through due to a lack of EWS1 certification (due to cladding) and two subsequent sale attempts also fell through, and so we had it revalued, and remortaged so that we could take out equity, move house and rent the flat out til the cladding was sorted. This was valued at £230,000 (an increase from the £155k buy price)

As is stated on HMRC's own website, they allow an extension to the stamp duty higher rate 3 year period for certain scenarios, and one matches ours specifically (example 5 on the HMRC website on the page called "

SDLTM09807 - SDLT - Higher rates for additional dwellings: Condition D - exceptional circumstances"

- the forum will not let me post a link sorry!)

Now my question is, if HMRC see this as exceptional circumstances, do they have the same views when it comes to capital gains tax?

The reason I ask is that the flat has been rented for the 4 years that it was unsellable, and now that we have our EWS1 form, I have sold it at the first opportunity for £215k (a gain from the purchase price, but a £15k drop from the value when it flipped to being a rental).

Obviously, normally I would expect to pay tax on the gain from £155k to £215k, but is there any scope for relief here as HMRC have already shown precedent with regards to Stamp Duty?

Has anyone experienced this too?

Thanks
Simon

Jeremy535897

The £230,000 value is irrelevant for capital gains tax, which will be based on the gain of £60,000, less acquisition costs, selling costs and improvements. But the period it was your main residence, plus the last 9 months, will be exempt, so, assuming your wife lived there too as her main residence (a married couple living together can have only one main residence), the gain will be significantly reduced. Do the calculation based on months. Was it jointly owned?

[Deleted User]

Taking it as jointly owned (based on ‘we got it revalued’ as opposed to ‘I have owned an apartment’) and assuming bought in October 2014 and main residence until October 2019, 69/108 of the £60000 would be exempt - 38333. This leaves 21667 chargeable - 10834 each. As Jeremy states, allowable costs reduce this amount further.