Selling house whilst living abroad...

[dilbertina]

We are currently living in France (renting) with my husband's work. We have been here for 18months and plan to stay another 18months. We own a house in the UK which we currently rent out.

We plan to sell this house and buy a bigger one for us to move into upon our return to UK (dc have multiplied and old house would not work now!)

We obviously want to avoid capital gains tax on sale of old house and I'm worried this might get complicated. I think we'd be ok if we move back into old house before selling it, but I really don't want to do that even temporarily because 2dc are school age and I don't want to move schools more than necessary.

Ideally we'll sell the house next autumn when current tenants have been there a year as I feel it would be unfair to force them out sooner! It is a sought after area so hopefully we'll sell fairly easily. (fingers crossed!) That would then leave us a few months to purchase somewhere else (as effectively cash buyers.

Has anyone been in a similiar situation or can advise on Tax implications? We will sort out proper advice at some point but I'd like to have a bit more of an idea now!

Many thanks for any advice.

I spoke with the IR regarding this last week as I am in a similar situation. They have advised me that providing this property was my primary residence prior to the move and that the property is sold within 3 years of you moving out it will still be classed as your primary residence and you will not incur CGT.

You should check with your tax representative though upon your return.

Gonzo is right. If the property was your main residence before you moved to France then it is unlikely you will have to pay any CGT.

The basic rules are:

1. no CGT for the period you actually lived there and it qualified as your main residence (the last part is only relevant if you owned more than one property at the same time)
2. no CGT for the last 3 years of ownership if the property ever qualified as your main residence (regardless whether you lived in it during those 3 years or not)
3. up to £40k CGT-free if the property was ever your main residence and you've rented it out. (this will only be relevant if you don't sell within three years of moving out).

More detail can be found here: www.hmrc.gov.uk/cgt/property/sell-own-home.htm