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Liable to Capital Gains Tax? Own 1 property
Queenied
Posts: 13 Forumite
Am I liable to Capital Gains Tax? – Own ONE property only which I rent out
Hi. This is the first time I have posted anything on this site and would be very grateful for any advice. Apologies in advance for the length – I just want my situation to be clear. I have read through various web sites and can’t find any examples of what to do in my particular scenario.
I live in rented accommodation in London however I own ONE property in another part of the country which I rent out whenever I can. The only reason I bought it was so as to get on the property ladder so that when I sold it I would hopefully have enough for a deposit to buy somewhere I myself wanted to live in the future
I have owned the property since Dec 2003 and am looking to sell it in the second half of 2008 (so post the new CGT legislation if it goes through). I have NEVER lived in the property and have rented it out whenever possible (with mixed success). During the times when it was empty the utility bills came back into my name as did the council tax. However I got a reduction in the CT bill as there was no one living in it. My correspondence address for bank, credit card statements etc remained my address in London.
I will shortly be giving my current tenant the correct notice period (as per the tenancy agreement and law) so she should be out by the start of April. I will transfer all the bills back to my name, and having read other posts / websites, will also transfer my correspondence address for the bank, employer, driving license, electoral roll etc over to the property for a while to be on the safe side. To be honest, I do not plan to live there but can pop in reasonably regularly
What I would like to know is if I am liable to CGT even though it is the only property I own? All the literature I have read refers to people who own 2 or more properties. My accountant thinks I could be liable as it has never been my main residence. (Hence the reason why I will probably be changing my correspondence address for lots of things in April, not just the utility bills). By the way, my tax returns show that I get an income from the property
Secondly, if I am liable to CGT, I have read that I can claim partial private residence relief and possibly lettings relief if I can prove that, at least on paper, I have lived at the house for a while. This would give me tax relief on the last 3 years I owned the property. However, can I still do this if it only becomes my main residence towards the end of the time I own it?
FYI. I am employed but work from home so it is not an issue that I do not live near my employer. Also the property I own is nearer to family and, all being well, I will be on maternity leave at that time, if this is relevant. I also have a BTL mortgage on the property in question
Many thanks in advance for any tax / legal help provided.
Hi. This is the first time I have posted anything on this site and would be very grateful for any advice. Apologies in advance for the length – I just want my situation to be clear. I have read through various web sites and can’t find any examples of what to do in my particular scenario.
I live in rented accommodation in London however I own ONE property in another part of the country which I rent out whenever I can. The only reason I bought it was so as to get on the property ladder so that when I sold it I would hopefully have enough for a deposit to buy somewhere I myself wanted to live in the future
I have owned the property since Dec 2003 and am looking to sell it in the second half of 2008 (so post the new CGT legislation if it goes through). I have NEVER lived in the property and have rented it out whenever possible (with mixed success). During the times when it was empty the utility bills came back into my name as did the council tax. However I got a reduction in the CT bill as there was no one living in it. My correspondence address for bank, credit card statements etc remained my address in London.
I will shortly be giving my current tenant the correct notice period (as per the tenancy agreement and law) so she should be out by the start of April. I will transfer all the bills back to my name, and having read other posts / websites, will also transfer my correspondence address for the bank, employer, driving license, electoral roll etc over to the property for a while to be on the safe side. To be honest, I do not plan to live there but can pop in reasonably regularly
What I would like to know is if I am liable to CGT even though it is the only property I own? All the literature I have read refers to people who own 2 or more properties. My accountant thinks I could be liable as it has never been my main residence. (Hence the reason why I will probably be changing my correspondence address for lots of things in April, not just the utility bills). By the way, my tax returns show that I get an income from the property
Secondly, if I am liable to CGT, I have read that I can claim partial private residence relief and possibly lettings relief if I can prove that, at least on paper, I have lived at the house for a while. This would give me tax relief on the last 3 years I owned the property. However, can I still do this if it only becomes my main residence towards the end of the time I own it?
FYI. I am employed but work from home so it is not an issue that I do not live near my employer. Also the property I own is nearer to family and, all being well, I will be on maternity leave at that time, if this is relevant. I also have a BTL mortgage on the property in question
Many thanks in advance for any tax / legal help provided.
0
Comments
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Your accountant is correct. You can only avoid CGT if the property was your own home in the period you owned it, and you used it as your own home and did not use it for any other purpose e.g. renting out. Unfortunately you can't change that retrospectively.0
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Thank you Narced. But what happens if it was my home (with all corresp. coming to it) between April 2008 (once tenant I left) and when I sold it eg Sept 2008?
Would I be able to get partial private residential relief for the last 3 years I owned it (including the period from April to Sept 2008) and then lettings relief for the other periods when it was let out (meaning I would only be liable for tax on the periods when it was empty)? Many thanks again.0 -
why not ask your accountant - he's the expert0
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Thank you Narced. But what happens if it was my home (with all corresp. coming to it) between April 2008 (once tenant I left) and when I sold it eg Sept 2008?
Would I be able to get partial private residential relief for the last 3 years I owned it (including the period from April to Sept 2008) and then lettings relief for the other periods when it was let out (meaning I would only be liable for tax on the periods when it was empty)? Many thanks again.
If the revenue accepted it was your home for those few months, you would get PPR relief for the last 3 years of ownership and lettings relief (max 40k). You would also have your CGT allowance (9.4k next year). The CGT rate should be 18% by then.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Thanks for all your advice everyone0
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5 months is a bit short to be claiming it as your PPR. My accountant and other comments on here in the past lead me to this guidance:Thank you Narced. But what happens if it was my home (with all corresp. coming to it) between April 2008 (once tenant I left) and when I sold it eg Sept 2008? ....
up to 3 months - no chance
3 - 6 months - slim chance
6 - 9 months - some chance
9-12 months - reasonable chance
> 12 months > good chance
All IMHO
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