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CGT property advice

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We own two properties, A & B. Property A was purchased in 1992 and I lived there for approximately four years, after which it was tenanted. We then purchased property B in 2003. Property B was initially tenanted for about three years but we subsequently moved in and are still here. Our aim is to move back into property A within the next two years, or to sell it. As it stands we will incur a cgt bill for about £60000 if we sell property A. I have read somewhere that if we sell property B and purchase another property, property C, we can then nominate which property to be charged the cgt on, either property A or property C. Any thoughts or advice would be welcome.

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  • p00hsticks
    p00hsticks Posts: 14,439 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 16 May 2024 at 12:56PM
    cookie98 said:
     I have read somewhere that if we sell property B and purchase another property, property C, we can then nominate which property to be charged the cgt on, either property A or property C. Any thoughts or advice would be welcome.
    A link to the 'somewhere' might be useful, but I suspect that it is either incorrect or you have misread / misinterpreted it.
      
    As property A has been tenanted for a period of your ownership there will always be a potential CGT liability.

    What you may be thinking about is that if you purchase a new property and own more than one, then you have up to two years after the pruchase to nominate to HMRC which of them you wish to be considered as your main residence for CGT Private Residence Relief purposes.

    But my understanding is that this nomination has to supported by the evidence, so can only be used if you are actually living in the property you nominate or are genuinely dividing your time between more than one property. And the fact that one is nominated as your main residence doesn't wipe out any potential CGT liability for that residence if it hasn't been your main residence for the entire period of it's ownership. 
  • Phoenix72
    Phoenix72 Posts: 425 Forumite
    100 Posts Name Dropper
    Think you have misunderstood what you read.  Whatever you do Property A will still be liable to Capital Gains Tax but you will be able to claim Private Residence Relief for the period you actually lived in it.
  • Bookworm105
    Bookworm105 Posts: 2,016 Forumite
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    edited 16 May 2024 at 1:40PM
    the nominate to which you refer is to distinguish which of 2 (or more) properties you own should be classed as your main home

    however, to nominate a property it must be AVAILABLE to use for use as a home, ie if the property is tenanted then it cannot be a main home for you as it is not available to be used as such, so you cannot nominate it.

    For example, if you were to sell B, keep A, and buy C, you cannot nominate A if it is tenanted, nor could you let C. You would need to keep both A and C as your own homes (with implications on one of then for second home council tax rate).

    For the avoidance of doubt as you seem unsure, CGT main residence relief ("exemption") applies only for the period you physically lived in it (or validly nominated) as main home. Since A has been tenanted since approx.1996, it will always have a (substantial) CGT liability which you cannot eliminate by moving back to it. If you do move into A then it means all you achieve is add a bit of extra relief time whilst living there.
    CGT net taxable gain calculation is: £ total gain - ((main home time/total ownership time) x £ gain) 
  • eskbanker
    eskbanker Posts: 37,180 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You'll be fine, just wing it ;)


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