CGT on a house that you lived in and had to move away for work, rented elsewhere and couldn't move back into it.

[nicolacootes]

Can anyone help with this as I keep going around in circles. We bought a house to live in, lived there for 3 years then my husband got a job abroad. After 10 years we moved back, with the view to moving into the house. We relocated during the pandemic and couldn't get the tenant out of the property, so had to rent elsewhere. In the end we had to take him to court to get him out. We then had to sign a contract ourselves so had to continue renting. We now want to sell. I've been on the HMRC website and understand that we (may) have to pay CGT on the years we rented the property out even though we had to move for work (which I believe makes a difference as it wasn't bought for an investment and our only home as we had to move around for my husband's job). I've read through every bit of legislation I can find on this and still can't get a straight answer. I understand that we will get PRR for the years we rented if we have to pay and reduce the bill by taking fees off the total, but I just want to know if we will have to pay it or not. Any advice is helpful! Tried HMRC and just can't get through!!

Yes you do. Calculation is set out here.

www.gov.uk/tax-sell-home/let-out-part-of-home

No you don't. Moving abroad for work plus the pandemic limits on removing tenants mean that you were unable to live in your home. Assuming that it's your sole residence CGT will not apply. Worth getting an accountant to deal with HMRC though.

There's a stamp duty helpline at HMRC. I found them better than our conveyancing solicitors.

Just to say that I'm only so sure about this because we had the same issue and paid no CGT when we sold.

Call HMRC for help with Stamp Duty Land Tax queries.
Telephone:
0300 200 3510
Outside UK:
+44 1726 209 042

Call, ask them to confirm by email and ask exactly where in their guidance you should be looking.

Sorry just realised it's CGT, they were so helpful I'd try them anyway.

I’m a tax adviser 😊

So the first 3 years will qualify for PRR as you occupied the property as your only/main home, and the last 9 months of ownership will qualify for PRR (even though you don’t live there).The rest of the gain will be taxable.

HMRCs calculator is pretty good, just need to plug numbers/dates in - www.gov.uk/tax-sell-property/work-out-your-gain

If you are able to actually reoccupy the property before you sell then the 10 years you lived abroad will be exempt too.

Surely you could occupy the property now and not live in the one you had to rent and ask to be released from the contract early if they can relet it?

Thanks all! Ok we live in the North of England and the property is in the South. The original property was in Bristol for work. Our family is in the North. As we couldn't move back in we stayed up here and then had to look after my father in law who has Dementia. Either way moving back in now is impossible because the decision was taken away from us at the beginning, as we had no choice but to rent up here. I looked in the HMRC guidance and there isn't anything about the pandemic and unable to move back in. The post for PuppyLucky what happened with you? We have an accountant who is dealing with all our US UK tax but I'd rather go into this knowing the facts first beforehand.

@nicolacootes We moved out of our main residence for 4 years and let it out as we were working abroad. For that period our accountant nominated the house as our primary residence (basically just confirming we didn't have a permanent home elsewhere). As I remember (details are hazy) it was all about confirming that we didn't have any permanent plans to live anywhere else. As it was obvious that we couldn't live in our house whilst we were abroad our capital gains liability was nil. I'm less sure about the UK element of your post but a good UK based accountant will help you and ensure that you make the right declarations to to the HMRC to ensure they accept your main residence status. Hope that helps!

My understanding is that you’ll get relief on the 3 years of gains when you lived there but the rest will be subject to CGT. If you’d have sold whilst not living in the country and paying taxes elsewhere I don’t think you’d have been liable.

I don’t think the pandemic / not being able to evict makes any difference sadly.

Take a look at lettings relief too. It's calculated taking into account ppr but can reduce the amount of cgt.

Ok so I called the HMRC and was given the document number under the CGT manual on their website. It looks like if you moved abroad for work and bought the house to live in initially. Moved away and then intended to move back into the property you don’t have to pay the CGT. As it was your soul residence when you left and the same when you returned. Moving away for work especially with the company who you worked for in the UK was the reason for it, then to move back and go back to work for them makes a difference. Even if we had let it out.

Pupplylucky was right on this one. It’s very complicated area though and even the HMRC didn’t ‘t have the answers straight away. ‘The PPR relief provisions will apply to the swelling hours we which they intend to occupy as if it were actually occupies as a residence during the period in which the intention to occupy it existed’ As it was our main residence whilst we were abroad and we had to mov around for his work, the time we were abroad qualifies for PPR.

Thanks! so helpful to hear from someone who has actually done the same thing!

Pleasure! It kept me awake at night for ages - getting an accountant to help sas the best thing I did for my sanity!

May I ask if anyone could tell me what “sole residence” means? Does it mean sole residence in this country? Because OP did have another residence, only it was a rented one. Do rental homes not count as residences?

Yes it basically means sole UK residence - the exemption applies when an individual has to move abroad for work, it’s different if you move within the UK (for work reasons and non work reasons!).

OP - unless there is more to it than you have posted here, I don’t think I agree with what HMRC told you. Since you have a tax adviser it’s best to talk to them since they know the specifics 😊

It doesn't seem right to me that it is considered your 'main residence' at a time you were renting it out to someone else and making money from it.

Thanks Easter.

The HMRC look into what the purpose was for (ie to rent or intention to stay (as was ours), makes all the difference. We didn’t buy it to rent, we had no choice but to leave for my husbands work. We didn’t buy anywhere else so had to rent on top of paying the mortgage. Even with the rent being paid we were still way worse off. We only kept it so we could return to it. If we had bought someonewhere else then I expect it would be different.

Correct Easter Egg!

Hi OP. I’ve just sold a property in very similar circumstances however my work move was within the UK. My accountant has confirmed I will be liable for CGT on the basis the property was rented out in full during my absence and I did not reoccupy before selling.
I think the rental element is key, did you explain that to HMRC when you spoke to them? I think an empty property might remove the CGT liability, but if you’ve earned an income from it then my understanding is that changes the picture completely.

Lettings relief no longer applies when the full dwelling is rented out. It only applies if partially let, i.e. someone renting part of your house whilst you're also living in it at the same time.

I'd also suggest getting tax advice re UK income tax, if you haven't already and you didn't pay it in the UK when you were overseas. Stating your UK residence was your sole residence potentially opens you up to UK income tax liability (although this is a complex area).

Always best to take tax advice to be on the safe side - and avoid a bill/fine later.