Capital Gains Tax - any experience?

[20wkbaby]

My DH and I have a second property that was our main home until 2 years ago when we let it and moved into another house. We are now wanting to sell the first property but I find the hmrc website so confusing and can't tell whether we will have to pay CGT.

I have a feeling the rules have changed within the last few years as my mother was in a similar position and didn't have to pay and believes it was because she was allowed a grace period between moving out and selling, but I can't see anything giving any kind of timescale of this nature.

Does anyone have any recent experience of this or advice where to look for more information?

Gains attributable to the period when you occupied the property as your main home are free of CGT due to the principal private residence exemption.

In addition, the final three years of ownership are treated as if you occupied the property. So if you sell within 3 years of moving out the entire gain should be free of CGT. Lettings relief of up to £40k should also be available if you sell outwith this 3 year period.

I'm not sure whether you would need to report the sale in your self assessment return, albeit that no tax should be payable. Hopefully someone experienced in tax compliance will be able to advise.

That all sounds positive! Thanks for the reply.

You do have to nominate which house is/was your main residence - you can do this retrospectively. I'd get a specialist CGT tax accountant to do this, just so everything is correct. Should be under £500.

last time I looked, it is exempt from CGT if it is sold within 3 years of you leaving. Your solicitor will confirm but you should be ok - get the sign up ASAP.

BTW I think if you weren't married you could nominate it as residence for one of you, but divorcing for this seems a bit extreme. :-)

Call HMRC. Tell them the facts. Principle private residence until 2 years ago, let for 2 years now selling. They will tell you how to elect for PPR relief and what to put on your self assessment return.
(If you don't elect they follow the fact pattern anyway but it is much more clear cut just to tell them!)
And don't waste any money on lawyers or advisers! No need!!

And last 3 years exempt as said above!
So just ask HMRC how to do the forms - it's what they are there for!
But don't leave it till January as the lines are busy with the filing deadline!!

OP, have you lived in the "new" house for more or less than 2 years?

For your old property, you're treated as if you lived there the last 3 years of ownership even if you didn't. You have 3 years to sell it if you move out. If you file a tax return then you just need to include it on the capital gains tax page and fill the box claiming private residence relief. It's really easy.

However, your more looming issue is that you have to nominate your new home as your main residence and tell HMRC. You have 2 years to do this by writing to HMRC.

have a look at this link

Thanks for all these replies. To clarify we haven't lived in original house since end of October 2011, so just over 2 years so effectively just moved house but kept the old one to rent out.