Capital gains tax confusion on a second house!

[MrsHarryRamsden]

hi, i'm sorry if this subject has been done to desth but i cant seem to work out a straight answer to our situation using HMRC website

i'll try to be brief...

dh and i bought house A in jan 2001
we bought another house B in april 2010 and remortgaged the first house A on a buy to let mortgage in order to help finance house B
we moved into house B in jun 2010 and let out house A at the same time

we sold house A in aug 2010 for £46.5 k more than we paid in 2001

will we be liable for capital gains tax? i understand there are all kinds of reliefs etc but have got myself in knots trying to apply then to our situation!

thanks in advance

Letting relief doesn't only apply when you rent PART of your home. It also applies when you rent the WHOLE of your home part of the time of ownership. See example 9 here which is pretty much exactly the OP's situation: www.hmrc.gov.uk/helpsheets/hs283.pdf

As far as elections are concerned they are completely irrelevant when you're renting out one of the houses. But if the property has EVER been only or main residence then the owner can get last three years exempt, no matter whether it's rented or not.

our house A sold for less than the 2010 valuation as the market had dropped considerably