CGT - considering moving abroad

Leiden

At present our main residence is in the UK, we have a 2nd property in Spain where we occasionally stay, within Schengen restrictions but are not tax resident in Spain.

We're exploring the possibility of applying for a Non-Lucrative Visa (NLV) which would of course carry with it tax residency in Spain. In tandem we're considering selling our UK home to both release cash to help family members and also secure a downsized UK property for ourselves. (Although we'd enjoy the flexibility of spending more time in Spain, we're not at the point where we'd completely want to give up our links in the UK) We'd expect to make a profit on our UK home if sold.

Am I right in thinking that, in order to avoid CGT, we'd need to sell our UK home whilst it was still our main residence and whilst we were still UK tax resident i'e. before pursuing the NLV?

In terms of timing, if we were to sell the UK property in the current tax year, would that mean we could safely pursue the NLV from April 2025 onwards?

Are there any considerations we should be aware? 

Thanks in advance for any thoughts or contributions.

Jeremy535897

This would take a book to answer, but basically gains on UK property are taxable in the UK whether you are resident or not. What matters is the period it is your main residence. The last 9 months of ownership of a property that has been your main residence counts as a period of occupation as main residence. See:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2024
So the longer you take to sell it, the more of the gain is taxable. I don't know what the Spanish rules are, but you might get into a double tax situation if you sell when resident in Spain.

Leiden

Thank you for the link and helpful comments.

I'm interested in the bit about qualifying periods of absence which may be treated as periods of residence including absences, for whatever reason, totalling not more than 3 years in all.

Having bought what is still our main residence in the UK about 16 years ago, we have perhaps spent around 7 months staying in our property in Spain. I assume therefore that until that cumulative figure reaches the 3 year mark then those absences still count as periods of residence in our main residence? So, although the clock is ticking with every absence, we still have time to figure out what we want to do?

As an aside, I assume that it is only the fact that we are staying in a 2nd property that we own is what brings it into play. Someone absent on a 12 month cruise or staying long term in an air bnb would not even need to consider this?

Jeremy535897

Even where you have no financial interest in a property (for example you are a tenant), that property may de facto be your main residence. You should therefore nominate the main residence in which you do have a financial interest, for the avoidance of doubt. You have unlimited time to do this, but where you have two properties in which you have a financial interest, you have to choose between them, or the main residence will be a question of fact (broadly speaking, the home most occupied). This must be done within two years of the last acquisition of residential property you occupy.
If you acquired the Spanish property in the last two years, you should consider nominating it now, to avoid any doubt (assuming that's the right thing to do in your circumstances).
Note that the three year rule only applies to a period of absence when you reoccupy the property as your actual main residence after that period of absence.

Leiden

Thank you again, and I'm beginning to see what you mean about needing a book!

My inclination would be to nominate the UK property as the main residence, with a view to then selling it whilst still attracting full relief on CGT. If I understand correctly, I simply need to nominate it as such within the 2 year period? How, by simply writing to HMRC?

I could then sell the UK property at some future point, whilst taking care to still avoid CGT by staying within the 3 year absence limit until I've done so?

Jeremy535897

From HS283:

If you live in, as your home, 2 or more houses, you can only have one main residence at a time for Private Residence Relief.

You can nominate which residence is to be treated as your main residence for any period. Your nomination must be made within 2 years of the date you first have a particular combination of residences. If there’s a change in your combination of residences, a new 2-year period begins. If you do not make a nomination, the question of which is your main residence will be determined on the facts.

For process see https://www.gov.uk/tax-sell-home/nominating-a-home

silvercar

I have a friend who went down this route to avoid a large CGT bill. You need specialist advice. The difficulty for him was the number of days he could be in the UK. I know he kept spreadsheets of the time he was in the UK overnight, to keep a tally. The number was higher initially and then dropped in subsequent years. He talked of owning a property here reducing the number of days allowed (to be in the UK). I think it started at 45 days, because he had a property here and a business interest and close family, but it is now 90 days.