Capital gains on a holiday let??

shamac

Hi have posted this on another thread but think this might be more appropriate. We are thinking of letting out our house as a holiday let and renting somewhere for us to live. This would be for about 12 months and we would then sell our house and buy another one to live in. What would be the position as regards capital gains tax when we sell? We only have one property. Thanks.

fengirl_2

The only chargeable period on this house when you come to sell it will be the 12 months during which it is let. In addition, there is a maximum £40k exemption for property which is let after being your only or main residence.
So, for example, if you own the house for 20 years and make a £100,000 gain, only one twentieth of that will be taxable, or £5000. This is covered by the let property exemtion, so there would be no tax to pay.
It is extremely rare for CGT to be payable on a property which has been let and is the only or main residence as this is not what CGT was designed to cover.

Pennywise

As long as you have lived in a property as your principal private residence, the last three years ownership are exempt, so as long as you lived in the house continuously since you bought it, and as long as you sell within three years of moving out (regardless of whether it is let or is empty) there will be no CGT.

shamac

Thanks for that -does it make a difference in that we have built it ourself-would the date of occupation be when we moved in or when it was signed off by the building inspector and regarded as officially complete??