Capital gains tax on houses and the law?

WHA

Ian_W wrote:

From reading advices on these threads and doing some research re my CGT issues [so no expert] my opinion is best case no GCT, worst case next to no CGT.
Arguable that it's always been your principal residence [ppr] and is exempt - as you don't co-own in Glasgow. If that isn't the case, ignore last 3 yrs ownership + 18 months you resided in it as your ppr and you have only 6/12 months as a proportion of your ownership to count in terms of your total capital gain. You would then be able to apply taper relief, relief for letting and your personal all of £8.5k before tax is due at your normal rate.
Example: Gain £120k, owned for 60 months. 120 x 6/60 = 12k minus reliefs & allowance = not very much @ 20 or 40%.
Probably worth paying an accountant in Glasgow [cheaper than London] to check the figures before you do a SA return.

And there should be letting relief as well which would reduce the gain still further.

Kenny4315

Why not get a CGT leaflet from the inland revenue web-site there very informative, and if you have further queries you could always ring them up directly and they will explain any further points. If you tell them the details they are very helpful, or at least from my dealing they have been.

The 3 year exemption has existed for a while now and is there quite rightly because often people are not able to buy & sell simultaneously, for instance, if the new place needs renonavating, or they need to move immediately for work and can't sell, etc. However, it is not a means/loophole for full on developers.

Paul_O'Kshields

Thanks for the replies, folks. Obviously I'll need to speak to a professional but from what you guys are saying it's not quite the apocalyptic scenario I had envisaged when I first cracked on to the existence of Crapital Gains Tax.

nlpnlp

If you buy a property with a view to selling it on for a gain then the Revenue can say you are trading and tax any profit as self employment income. If you buy a lot of properties and sell them on in a short time then the Revenue are going to catch up with you.

What they can't object to is people owning more than 1 property at a time and using the Principal Private Residence (PPR) relief and PPR election to take advantage of the 3 year exemption. In there own guidance manuals they give an example of how to get 3 years relief on a second property whilst only losing 1 weeks relief on the first. The example in their manual is quoted below:

64512.
Variation of notice: example

A person has had two residences for many years, residences X and Y. He has submitted a valid notice nominating X as his main residence. On 1 January 1992 he disposes of Y and realises a large gain.

In order to obtain some relief in respect of that gain, on 1 February 1992 he submits a variation to his original notice which nominates Y as his main residence from 1 February 1990. On 8 February 1992 he submits a further variation which nominates X as his main residence from 8 February 1990.

So Y has been validly nominated as his main residence for one week in February 1990. As Y has been his main residence for this period he is entitled to the final period exemption, see CG64985+. For a disposal in 1992 this was 36 months. The result is that at the expense of a loss of one weeks relief on X he secures three years relief on Y.

neomagik

I have just built a house with a "self build mortgage" whilst living in another house. I am about to move in to the new house and renovate the old one which I have lived in for nearly a year.

1) How long do I need to live in the new house for as my PPR to eliminate the cgt requirement upon its sale?

and

2) Following renovation, will I be liable for paying cgt upon the sale of the old house?

Thanks.

sarah1980

What about if you buy property, spend x amount doing it up and then sell? e.g. buy for £50k, spend £10k, sell for £75k. Would only £15k be subject to CGT? What about solicitors/mortgage fees?

Shanj

What are the effects of CGT with granting a leasehold rather than selling?
I want to help my boyfriend get back on his feet and be independent, so I want to grant him a leasehold on my old home for a very modest sum, like a token amount.
I lived there for 6 years and moved out a year ago.
Obviously while I am willing to help him like this I don't want to have to pay CGT for it.

Sully316

Please tell me that anyone who has a 2nd property is declaring the rental income and paying relevant income tax on this after allowable deductions of course.