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capital gains tax, what will i need to know?

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markf1983
markf1983 Posts: 2 Newbie
in House buying, renting & selling
We bought a house in June 2010 with a buy to live mortgage for £90,000, we lived in it until Feb 2013 when we moved into a rented house due to moving away with work to the other end of the country. We still live in rented accomodation.

We rented it out until last month (Jan 2018) when we decided to sell, we have sold it for £150,000 and stand to make £80,000 after all fees (awaiting sale to go through).

Do we need to pay capital gains tax or is it classed as our first home which we are led to believe we dont need to pay CGT on?

We are not financially savy so dont understand any of the jargon on the HMRC website so if anyone replys please use laymans terms.

Thanks in advance.
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  • AdrianC
    AdrianC Posts: 42,189 Forumite
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    It hasn't been your primary personal residence since 2013, so you need to pay CGT on the portion of time since then.

    June 2010 to Feb 2018 is 93 months. You lived in it for 33 months, and lived elsewhere for 60 months. So you pay CGT on 60/93 of the £80k increase - £51,600.

    Examples 4 and 5:
    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief

    Your solicitor should be able to help you.
  • markf1983
    markf1983 Posts: 2 Newbie
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    Thank you for the quick reply, I am currently serving in the military and moved into the rented accomodation. does the HMRC take this into account?
  • AdrianC
    AdrianC Posts: 42,189 Forumite
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    markf1983 wrote: »
    Thank you for the quick reply, I am currently serving in the military and moved into the rented accomodation. does the HMRC take this into account?
    No. It doesn't matter why you're not living there. You could have sold it instead of renting it out...
  • Keep_pedalling
    Keep_pedalling Posts: 16,641 Forumite
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    AdrianC wrote: »
    It hasn't been your primary personal residence since 2013, so you need to pay CGT on the portion of time since then.

    June 2010 to Feb 2018 is 93 months. You lived in it for 33 months, and lived elsewhere for 60 months. So you pay CGT on 60/93 of the £80k increase - £51,600.

    Examples 4 and 5:
    https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief

    Your solicitor should be able to help you.

    The OP will also get relief on the last 18 months of ownership as well, and they will also be able to claim letting relief

    https://www.gov.uk/tax-sell-home/let-out-part-of-home

    That together with 2 lots of annual allowance to take into account probably means that there would be little if any tax to pay.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    edited 8 February 2018 at 9:16PM
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    AdrianC wrote: »
    No. It doesn't matter why you're not living there. You could have sold it instead of renting it out...
    not so

    OP states he is in the military and he says
    due to moving away with work to the other end of the country
    therefore he could fall within the job related accommodation rules if the move was because of a posting

    there is also then the question of whether there was an intention to return to the property after the posting. if that was the case, it does not matter that in reality you do not return, you would still retain a claim to PRR even though the property was let and you were living elsewhere because the elsewhere was rented, not owned.

    OP, for the sums of money involved go see a tax accountant (not just any old accountant) who is :
    a) familiar with CGT
    and
    b) up to speed on the absence rules especially as they apply to military postings

    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64555

    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65030

    you could easily owe nothing at all in tax
  • Gabbs_the_Newt
    Gabbs_the_Newt Posts: 154 Forumite
    edited 8 February 2018 at 9:24PM
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    AdrianC wrote: »
    No. It doesn't matter why you're not living there. You could have sold it instead of renting it out...
    None of what you have posted is true. Your initial post "forgot" the terminal 18 months that is due to anyone that disposes of a former home, and your subsequent post "forgot" that renting because of job based accommodation can be exempted.


    As a qualified accountant, who is studying for CIOT, I still had to reach for my textbook, I don't really understand why you would comment if you literally have no idea. Your final comment about selling it just smacks of jealousy.


    Anyway. To the OP, you probably have no tax to pay, but we need more info.
  • Choccygirl123
    Choccygirl123 Posts: 1,033 Forumite
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    I would call the tax office and explain your situation. You should have registered it as your primary residence because nature of work it was uncommutable abd housubg provided.

    You intended to live in the property, but your work meant it was not an option. I think you shouldn!!!8217;t have to pay a penny, but act quickly. Explain you didn!!!8217;t realise situation, but you would have applied for the primary residence if you!!!8217;d known.

    We were in same position and never lived in ours due to postings. I!!!8217;ll dig my letter out tomorrow and message you the outline letter if you!!!8217;d like?
    Good luck
    Finally Debt Free 24/4/2023 
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    edited 8 February 2018 at 10:01PM
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    Choccygirl123 wrote: »
    You intended to live in the property, but your work meant it was not an option. I think you shouldn!!!8217;t have to pay a penny, but act quickly. Explain you didn!!!8217;t realise situation, but you would have applied for the primary residence if you!!!8217;d known.
    there is no need to "apply" for primary residence since it was de facto just that

    you are perhaps confused over the "nomination" rules and the 2 year time limit for claiming main residence when you have 2 residences. But that is not relevant in this case anyway

    "Under a service occupancy the property is occupied under licence and as such it is not a residence within the meaning of section 222. Therefore if the individual has only one other residence, there is no need to make a nomination in favour of the property which is intended as the main residence in due course."
  • Choccygirl123
    Choccygirl123 Posts: 1,033 Forumite
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    Thanks 00z Still looking to dig my letter out, but vaguely remember nominating it and advising we could not live in house due to hubby service. We owned the house for 10 years and applied retrospectively for it to be our main residence as we were not aware it had to be nominated. It was always our intention to live in the house, but location meant it was just not possible. We sold 2 years ago without issue.
    Finally Debt Free 24/4/2023 
  • p00hsticks
    p00hsticks Posts: 12,834 Forumite
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    markf1983 wrote: »
    We bought a house in June 2010 with a buy to live mortgage for £90,000, we lived in it until Feb 2013 when we moved into a rented house due to moving away with work to the other end of the country. We still live in rented accomodation.

    We rented it out until last month (Jan 2018) when we decided to sell, we have sold it for £150,000 and stand to make £80,000 after all fees (awaiting sale to go through).


    ???? If you bought it for £90,000 and sold it for £150,000 then your starting point for a potential capital gain is surely only £60,000, not £80,000 ????
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