To avoid CGT, can BTL landlord own-occupy?

[Polly]

Hi eveyone

I am wanting to sell my property that i have rented out for the past 2 years. I have been told that i must live in it before i sell it , otherwise i will have to pay Capital Gains Tax.

I am not sure if this is correct ? If it is How long must i have to live at the property before selling it?

Please advise me?

[Tax Accountant]

Hi eveyone

I am wanting to sell my property that i have rented out for the past 2 years. I have been told that i must live in it before i sell it , otherwise i will have to pay Capital Gains Tax.

I am not sure if this is correct ? If it is How long must i have to live at the property before selling it?

Please advise me?

You need to occupy the property as your only or main home. If it is accepted that you have satisfied this criteria, final 36 months ownership, including the period occupied as home, will be exempted from CGT.

Whether you have occupied the property as your home is a question of fact and not dependent on length of occupation. However, a minimum period of 6 months is a good starting point.

Ramnik



Ramnik

[Polly]

Hello

I bought the property in 2004, althought i have a residential mortgage in it, i have never lived there

I will be moving into the house (hopefully) at the October. The tax office are aware i dont live there.

I will be informing the council tax of my change of address? Do i need to inform the tax office aswell?

Also would 3 months be enough to live there OR is it defo 6 months?

thank you

[Tax Accountant]

Hello

I bought the property in 2004, althought i have a residential mortgage in it, i have never lived there

I will be moving into the house (hopefully) at the October. The tax office are aware i dont live there.

I will be informing the council tax of my change of address? Do i need to inform the tax office aswell?

Also would 3 months be enough to live there OR is it defo 6 months?

thank you

Where are you staying at the moment?

Is this rented or owned by you?

Why do you want to move in the other house?

Why do you want to move in for only 3 months?

What will happen to the house you are living in now?

As I have said before, there is no set time required to qualify for PPR relief. Actual facts will decide if you qualified for PPR relief.

If it is clear that you only moved into the house for 3 months so as to qualify for PPR relief, the tax office may contest your claim that this house was your home.

Ramnik

[Polly]

Where are you staying at the moment? Staying with my parents at their home

Is this rented or owned by you? i pay them board weekly

Why do you want to move in the other house? i don't but i dont want to leave it empty - and the mortgage compant think i live there - i dont want to get caught out

Why do you want to move in for only 3 months? i have been told by someone 3 months is the avg u should stay in a house before selling to avoid cgt

What will happen to the house you are living in now? nothing

I am moving to the otherside of the country at the end of may ( as i am getting married), so there is no possible way i could manage the house d live so far away.

[Tax Accountant]

Once the house becomes vacant, you could continue to live with your parents as your main home AND ALSO start using your own house as your secondary home. Therefore, you will have two residences and the house owned by you will be your secondary residence.

In this case, you could write a letter to your tax office and nominate the secondary home (house owned by you) as your main residence for Capital Gains Tax purposes.

For nomination purposes the burden of proof of using the property as your home is far less than in the case where you use a property as your actual main home. But it is important that you must use the house as your residence, although not necessarily as main residence. You will of course need to register for council tax and all utility bills in your own name.

If you then sale because you get married or because you move away from home, the final 3 years of ownership will be exempt from CGT. If you have owned the house for longer than 3 years by the time you sell it, any excess period may be fully or partly covered by other reliefs and allowances.

In fact, if your new job is far away from your home, you could restart letting your house and may still be exempt from Capital Gains tax for a lot longer than 3 years.

I hope this helps.

[Polly]

Thank You


I will do that
as i am a student at the moment i should not have to pay the council tax

i will write to my local tax office as soon as my evicted tenant leaves

thank you

[Polly]

Hello

so i would need to to specify that the home is my 'secondary home' and would i need to mention about the CGT to the tax office or do i just write to say it is my secondary home and leave it at that?

thank you- i feel like a burden

[Tax Accountant]

Hello

so i would need to to specify that the home is my 'secondary home' and would i need to mention about the CGT to the tax office or do i just write to say it is my secondary home and leave it at that?

thank you- i feel like a burden

Assuming you are living with your parents and also living in your own home, you will need to write to the tax office along the following lines:

''I own a house at ..ADDRESS.. which was let until ..DATE.. and now I occupy it as my home from this date onwards.

I also live at my parents house at ..ADDRESS.. .

As I live at two houses, I hereby nominate my own house at ..ADDRESS.. as my main home for Capital Gains Tax purposes. This nomination is to be effective from the date I started using it as my home on ..DATE.. .

Please acknowledge.''

[Polly]

thank you so much

[landlord mortgages]

One thing to add to ramnik's remarks (for other landlords viewing this thread) don't become a serial house hopper or the inland revenue may see it otherwise


Other note: a main residence can be elected ie. not necessarily the one you live in

Lee

[MrWoof]

I'm looking to sell my letting business, either as a complete business or individual properties, with or without tenants. As these are owned by my own limited company, can I move in to one of them to avoid CGT?

[Tax Accountant]

I'm looking to sell my letting business, either as a complete business or individual properties, with or without tenants. As these are owned by my own limited company, can I move in to one of them to avoid CGT?

Hi Mr Wolf,

I think a separate thread would have been more appropriate, but never mind.

The properties are owned by your company and not you.

If you occupy any of the properties belonging to your company, you will need to pay a market rent or incur a benefit in kind tax charge.

PPR relief is only available to beneficial owners who have used the property as their own ''only or main residence''.

Therefore the simple answer to your query is NO.

But I am sure you already knew this and were only hoping against hope for a favourable reply.

Ramnik

[Tax Accountant]

a main residence can be elected ie. not necessarily the one you live in

Lee

Does this mean that someone can elect any property, other than the one they live in, as their main residence and therefore not pay any CGT on that other property upon disposal?

Ramnik