Tax question - capital gains if I sell a house that I don't live in...

[SuperBunny]

I have a house in the UK that I have not lived in for 6 years although I always intended to return to it (I have been living overseas). I know if I sell it, I will have to pay CG tax on the profit as it is not counted as my home and that is fair BUT I may be returning to the UK and I do not want to live in that house. I will need to sell it and buy elsewhere. If I do that, will I still have to pay CGT?

And, if so, how long would I need to live in the house to avoid paying it?

tia

I think it's six months as your main residence, that is what we have been working on, but I haven't checked for a while.

I have not heard of NOT paying CGT just because you are buying another house. Has someone told you that?

found this but am just reading it myself

maybe more helpful

actually that last page has a bit on working abroad

it looks like three years of your stay abroad is exempt from CGT as well as the time you lived in it after you bought it

so if you are liable then it would only be on the gains over 9,600 and for the number of years in excess of three

possibly

Do you pay tax in the UK? Who has been living in the house - have you rented it out?

It sounds to me like you may have been non-resident and non-domiciled in the UK for over 5 years in which case you are not liable to CGT on non-business assets.

If that is the case, it may be better to sell before you return to the UK. If it isn't the case (or you have been renting the house out), it will probably be better to return to the UK and use the house as your main dwelling before selling it. I say probably because there are some quite complex factors here which merit specific personal advice.

isn't non-domiciled something different and rather special that you have to apply for

it isn't just not living there

Thanks for the help.

I pay tax in the UK. I think I'm non-resident but domiciled in the UK.

The house has been let to random people for 6 years.

Will read bored's links. Think I need a laywer for this, probably

hello over here there are separate rules for houses that have been let

woo hoo

you don't need a lawyer! DO NOT go to a lawyer for tax issues, you need an accountant.

Ok - non-resident for more than 5 (I think) years, sell before you return - no CGT issues in UK (you need to check the tax regime of the country you are currently living in).

If you sell when back in the UK.
Assume owned for 10 years - lived in for first 4, let for 6. Gain of £20,0000 (for ease).
First 4 years - 4/10 x £20,000 = £8,000 exempt as principal private residance (ppr)
Last 3 years - 3/10 x £20,000 = £ 6,000 exempt as last 3 years of a property which has at some point been your ppr.
Therefore taxable = £20,000 - £8,000 - £6,000 = £6,000.

BUT you then get lettings relief (more complex, I could do it for you on the figures but am not going to explain it), and your annual exemption - curently £10,200 I think.

Crikey, that sounds complicated, Chasing Squirrels. I was told by a tax lawyer that I will have to pay CGT

How do I go about finding an accountant? I mean, I know I could google and pick one but I'd hate to just pick one at random. I need info asap.

Thanks for your post.

surely cs could be your accountant?

I've just been looking at the HMRC website but can't pinpoint the non-resident / CGT bit.
I am pretty sure that after 5 years of being non-resident you wouldn't be liable to UK CGT if you disposed of the asset while still non-resident, but can't find the bit of the legislation to support this.
Ah - found it. This says if you don't satisfy the conditions you are chargeable, therefore if you do then you aren't chargable.
This would therefore depend on you being not resident or ordinarily resident - see here.

You MAY have an issue with CGT in the country you are living in (if they charge on worldwide gains). You need to check the specific tax rules of that country.

If you sell it when you come back then and gain would be chargable to CGT, but there are reliefs as I decribed above.

Not sure if you want to post it here, but do you have the Purchase details - date and cost (net - after purchase expenses) and estimated Sales proceeds (again after sale expenses). Together with details of when you lived in the property and when it was let.

E-mail me if you want [email protected]

Thank you CS. And everyone.