When we moved we kept our first house and rent it out. We never changed the mortgage and some of the paperwork still is sent to the house. However, we obviously don't pay bills, council tax etc.
We are doing an extension on our current house and so will move back into the first house when tis happens, and then we plan to sell, reduce our main mortgage and have a smaller investment flat, closer to where we live.
How does capital gains tax work in this case? Does someone have to stay living in the house after the extension is done so we are there for at least 6 months? Or just keep bills going there? Do we declare the capital gains ourselves or is it calculated by HMRC? And do we pay tax on just the increase in value? I can't get my head around it all; sorry for all the questions!
there's no magic six month rule. To avoid paying CGT, HMRC need to be convinced that it is your main residence, i,e you actually live there.
also; did you get permission to rent from your lender? If not you are committing mortgage fraud and could be repossessed. Have you got landlord's insurance for the rental? Have you got legal expenses cover in case your tenants decide not to leave?
Capitals gains tax needs you (or an accountant) to calculate it. You don't wipe out the liability by living there, however you get to reduce the liability for periods of residence as you primary residence, plus a further 18 months. The cost of a good accountant will be FAR less than the tax they may save you.