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Original poster

2nd home tax relief- unusual situation

5 replies

loveka · 17/02/2017 09:46

My partner and I have a house we live in with a mortgage.

When we met he had a flat which he wanted to keep. After a few awful tenants he sold it and bought a house. He used this house as a business premises, so all mortgage, council tax, bills were paid by him. This happened for 8 years.

For the last 4 years, the house has been rented out to tenants. So they pay all bills etc.

We are thinking of selling it to buy somewhere else, and renting out our house we currently live in.

What is putting us off is the tax we would have to pay. If we sell our home we would pay much less tax. However, should we want to come back home at any point I would much prefer to come back to our home, rather than the house we rent out.

Would we get any tax relief as he was effectively resident at the currently rented out house for 8 years? Thanks.

OP posts:

LadyLapsang · 17/02/2017 10:39

It doesn't sound like the rented house has ever been your primary residence so I think the tax payable will reflect that. When did you buy your house with your partner and is your mortgage one for a residential property? What about the rented out house?

Original poster

loveka · 17/02/2017 11:08

We have had our house for 18 years, residential mortgage.

Rental house is on a buy to let mortgage, so I guess that answers my question. My partner originally rented it out to his own limited company. So I conclude we will have to pay full cgt, which makes the plan unviable I think.

OP posts:

UncomfortableBadger · 18/02/2017 17:26

Ignoring the CGT issue (speak to an accountant), presumably you're aware of the potential Stamp Duty implications of retaining one property & buying another...?

Original poster

loveka · 19/02/2017 08:40

Yes, aware of stamp duty. I stupidly thought that as we would be swapping the properties round, ie our main home would become the rental, there might be less cgt to pay. But I totally get now that it's not as easy as that.

OP posts:

JoJoSM2 · 20/02/2017 21:15

Could you just sell the house you live in and carry on renting the other property? Have you also looked at the details of cgt -i.e.how much you'd pay in a particular tax year and how to structure your income for that year to minimise your ctg liability?

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