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[wizard]

Hi,

I purchased a house in 2005 and have let it to tenants while I have lived in my parents house. I now intend to occupy the house as my main residence. Will I be exempt from CGT if I decide to sell after a few years, or will the property show as buy to let as that is what the inland revenue know at the moment. Are there any tax implications in living in a property that was previously a buy to let.


Regards
wizard

[Tax Accountant]

Hi,

I purchased a house in 2005 and have let it to tenants while I have lived in my parents house. I now intend to occupy the house as my main residence. Will I be exempt from CGT if I decide to sell after a few years, or will the property show as buy to let as that is what the inland revenue know at the moment. Are there any tax implications in living in a property that was previously a buy to let.


Regards
wizard

If you occupy the property as your home, you will have final 3 years exempt altogether. If you move in and sell within 3 years of purchase, all gains are exempt. If you sell at a later date, you will have the initial lettings period chargeable as a proportion of total ownership period.

I would say that the initial letting period, as a proportion of the total ownership period, will become insignificant as more time passes.

Although you cannot wipe off the lettings period, unless you sell within 3 years of date of purchase, using it as your own residence will be very desirable from a CGT point of view.

On another point, if you let a spare room to a lodger, you can have upto £4,250 rents from him/her tax-free.

Ramnik