Capital gains tax due if selling my only property (currently rented)?

[chrysanthamumm]

Hi, wondering if anybody can help with a tax query, I bought my flat in 2000, but then moved across country into partner's house 2002. So flat has been rented out since on original mortgage, i.e. not buy to let (bank aware it is rented) - we've now started family and want to purchase joint property, need to sell flat to put towards it. Will I be liable for capital gains tax because I haven't been living in it for 3 years even though I don't own any other property?

Thanks in advance to anybody who can help!

I'd always thought so, yes because you can't claim that its your principal residence - but I wait to be corrected by someone with more knowledge.

Are you married. You certainly will have to pay CGT if you are married because then you'll have two properties

It has to be your primary residence to avoid CGT so I think you may be liable.

inof. The law is changing but you would still be liable as it hasn't been your principle private residence for so long. You can claim some relief though and have annual allowances to offset.

chrys, on a side note, when you rented it out, and informed your bank, did you have to change your mortgage type, did the interest rate go up etc....?

We are about to go abroad, and rent ours out, but will be our residence when we return, DH doesn't think we should tell the bank, but I think we should.

brownsuga you have to tell them as you won't be living there and it is probably in the t and c' s. Also affects insurance. Abbey didn't change our mortgage at all in similar circumstances.

Hana, I keep pushing DH to do it (mortgage in his name). Does it affect anything, ie are they likely to make us switch to buy to let?

Thanks LIZS, will have a stern word with him this evening!

Thanks, didn't expect such a quick response!

We're not married, but guess this looks like will still have to pay.

BrownSuga, I was on a 2 year fix when first bought (100% mortgage those were the days...) - I moved out few months before the fix ended and HSBC said I could keep it until then and they would review. But they never did, so I never moved as figured any new lender would make me use BTL. BTW when you go away, if you renting out 'officially', and not to friends etc, there is loads you can claim back on tax etc - all the mortgage interest/letting agent fees etc - think should still apply if only for a year.

Thanks again for help everybody.

The calculation is quite complicated. If you have lived in the house at any time then some of the gain will be free of tax and this will automatically include the last three years of ownership. In your case it seems that you have owned it for 8 years and lived in it for 2 so including the last 3 years, five eigths of the gain would be free of tax. (This would need to be calculated more accurately based on actual months). On top of this there is a relief for letting. If you go on to the HMRC website and look for leaflet IR283 this will give you more detail.

You will also have an annual CGT allowance of £9,600 for this tax year. Any remaining amount will be taxed at 18%

That's really helpful roquefort, thanks so much. Looks like the final bill might not be quite so scary after all.

When we let our house out a year or two ago, we had to inform the B/Soc, and they officially changed our mortgage to a buy-to-let and charged us 200 quid for the privilege (admin fees!! Rip-off! The payments/interest rate didn't alter, however. It was a fixed-rate.