Capital Gains Tax

[Gonzo33]

The rules have changed somewhat since the last time I looked on this and I am a little confused.

I would like to know if I will be subject to CGT or if there will be a way around this situation.

I own a house that I lived in for 7 years as my family home with my ds. Two years ago I had to rent my property as my husband is a crown employee and we had to go and live abroad. Since we have lived abroad we have had another child and will no longer "fit" in that home. In a couple of years we will be moving back to the UK and we are looking at buying our "forever" home. To do this we will need to sell the property that I currently rent out. I know that you used to have to live in the property or a family member did for a minimum of six months prior to the sake to prevent CGT costs, but now I am not sure. Can someone point me in the right direction please.

Thanks.

The HMRC website has chapter and verse on CGT. CGT and property If you haven't lived in the home all the time you've owned it there are implications but the rules are quite complicated. Depending on the change in value of the property it could be worth it to consult a tax accountant

There is a chance you won't have to pay CGT on that property since it was your main home for a period of time (provided, of course, the rules won't change by the time you actually sell).
According to current rules you won't have to pay any CGT:

1. for the period where you actually lived at the property
2. for the last three years of owning the property (regardless of whether you lived there or not)
3. for some/all of the gain attributable to the period where you rented out the property.

This might sound a bit confusing so have a look at the HMRC website on the topic www.hmrc.gov.uk/cgt/property/sell-own-home.htm

There are some other lesser known reliefs regarding moving for employment reasons etc but these have significant restrictions and in most real-life cases aren't really required since the main reliefs (i.e. principal private residence relief and lettings relief - the ones mentioned above) cover the potential liability anyway.

Thanks. I have had a look at that site. I think I was looking at the wrong bit last night because I was getting very confused.

By the look of it I may get away without paying CGT if the rules remain the same. I think I'll have a chat with the HMRC nearer the time to confirm.

Me xx

I think you should be ok because you lived in the property, only moved out two years ago and you haven't replaced it with another principal residence here. I believe you usually nominate a principal private residence and that, when you sell it, is not subject to CGT whereas other properties bought and sold would be (this is how MP's "flipped" residences and avoided CGT). You don't even own any other property so it has to be your PPR IYSWIM. Worst case you may have to "move back in" although in practice this could just be a period while it is tenant free and up for sale and you state that you are living there.

Best to take a bit of advice from an accountant if HMRC aren't very clear with theirs though, worth that fee to get it right.