Changing Main Residence, Second Home, CGT and Council Tax

Supernova

Hi all,

I inherited a property last June when Probate completed, which I intend to live in as I am now being charged double Council Tax for the more valuable second home.

Is it as simple as telling the two councils that I am changing my main residence then writing to HMRC and changing the Land Registry?

Will this have an immediate effect on Council Tax or will it take a while. Presumably, the second property will then become liable for double CT and I may sell.

How does it get valued for CGT purposes?

many thanks!

Keep_pedalling

You can only claim the inherited property as your primary residence once you move in. Changing ownership on the LR is a separate issue, for an occupied property it is the occupier who is responsible for CT not the owner.

Assuming you have lived in your current home all the time you have owned it there will be no CGT if you sell it.

Supernova

Keep_pedalling said:

You can only claim the inherited property as your primary residence once you move in. Changing ownership on the LR is a separate issue, for an occupied property it is the occupier who is responsible for CT not the owner.

Assuming you have lived in your current home all the time you have owned it there will be no CGT if you sell it.

Thanks KP, so I can move into the inherited property immediately and claim it as main residence?

Then, if my current main residence becomes a second home, I believe I am liable for CGT based on current value if I sell in the future.

I think councils are allowed to charge double CT on owning second homes now and I think most of them do!

mta999

Yes make a note of the valuation of your current home now so that in the future if you sell it you can work out the gain if it rises in price

Calculation the gain liable to CGT is slightly complicated but you can look it up - basically it is a fraction based on the number of years you lived there as your main residence v  the total years of ownership plus some allowances

sheramber

Yes make a note of the valuation of your current home now so that in the future if you sell it you can work out the gain if it rises in price

Calculation the gain liable to CGT is slightly complicated but you can look it up - basically it is a fraction based on the number of years you lived there as your main residence v  the total years of ownership plus some allowances

CGT is worked out on the difference between the buying price and the selling price, less allowable costs such as buying/selling costs.

The gain is then proportioned according to time it was your main residence plus 9 months.

The value of the house when movong out isn't relevant.

mta999

yes true @sherambler is correct (as always !)

Supernova

sheramber said:

Yes make a note of the valuation of your current home now so that in the future if you sell it you can work out the gain if it rises in price

Calculation the gain liable to CGT is slightly complicated but you can look it up - basically it is a fraction based on the number of years you lived there as your main residence v  the total years of ownership plus some allowances

CGT is worked out on the difference between the buying price and the selling price, less allowable costs such as buying/selling costs.

The gain is then proportioned according to time it was your main residence plus 9 months.

The value of the house when movong out isn't relevant.

OK, great, so effectively there is no CGT payable on the gain since 1988. Otherwise, after the 9 months, it will only be a 1/444 liability or so.

For the second home, becoming the main residence, presumably the CGT is the value at probate less the proportion it is my main residence?

silvercar

Supernova said:

sheramber said:

Yes make a note of the valuation of your current home now so that in the future if you sell it you can work out the gain if it rises in price

Calculation the gain liable to CGT is slightly complicated but you can look it up - basically it is a fraction based on the number of years you lived there as your main residence v  the total years of ownership plus some allowances

CGT is worked out on the difference between the buying price and the selling price, less allowable costs such as buying/selling costs.

The gain is then proportioned according to time it was your main residence plus 9 months.

The value of the house when movong out isn't relevant.

OK, great, so effectively there is no CGT payable on the gain since 1988. Otherwise, after the 9 months, it will only be a 1/444 liability or so.

For the second home, becoming the main residence, presumably the CGT is the value at probate less the proportion it is my main residence?

You also have a CGT allowance, currently £3,000, if not used elsewhere.

For the second home, no CGT until you sell it. Under current rules the starting point would be the probate valuation, you can also discount up to 2 years if getting a home ready to live in between ownership and moving in.

Supernova

silvercar said:

Supernova said:

sheramber said:

Yes make a note of the valuation of your current home now so that in the future if you sell it you can work out the gain if it rises in price

Calculation the gain liable to CGT is slightly complicated but you can look it up - basically it is a fraction based on the number of years you lived there as your main residence v  the total years of ownership plus some allowances

CGT is worked out on the difference between the buying price and the selling price, less allowable costs such as buying/selling costs.

The gain is then proportioned according to time it was your main residence plus 9 months.

The value of the house when movong out isn't relevant.

OK, great, so effectively there is no CGT payable on the gain since 1988. Otherwise, after the 9 months, it will only be a 1/444 liability or so.

For the second home, becoming the main residence, presumably the CGT is the value at probate less the proportion it is my main residence?

You also have a CGT allowance, currently £3,000, if not used elsewhere.

For the second home, no CGT until you sell it. Under current rules the starting point would be the probate valuation, you can also discount up to 2 years if getting a home ready to live in between ownership and moving in.

Ah OK, thanks, does that mean building works or general cleaning up etc.? 

silvercar

Supernova said:

silvercar said:

Supernova said:

sheramber said:

Yes make a note of the valuation of your current home now so that in the future if you sell it you can work out the gain if it rises in price

Calculation the gain liable to CGT is slightly complicated but you can look it up - basically it is a fraction based on the number of years you lived there as your main residence v  the total years of ownership plus some allowances

CGT is worked out on the difference between the buying price and the selling price, less allowable costs such as buying/selling costs.

The gain is then proportioned according to time it was your main residence plus 9 months.

The value of the house when movong out isn't relevant.

OK, great, so effectively there is no CGT payable on the gain since 1988. Otherwise, after the 9 months, it will only be a 1/444 liability or so.

For the second home, becoming the main residence, presumably the CGT is the value at probate less the proportion it is my main residence?

You also have a CGT allowance, currently £3,000, if not used elsewhere.

For the second home, no CGT until you sell it. Under current rules the starting point would be the probate valuation, you can also discount up to 2 years if getting a home ready to live in between ownership and moving in.

Ah OK, thanks, does that mean building works or general cleaning up etc.? 

https://www.gov.uk/tax-sell-home/absence-from-home

The rule talks of being renovated, Merriam-Webster dictionary defines renovated as ‘ to restore to a former better state (as by cleaning, repairing, or rebuilding) ’ so it looks like a good clean would be covered.