Any Property Capital Gains experts around, please?

[Florence4170]

I have a complicated situation. And I can't find the answers I need. Would be grateful for any help please.

What’s the question?

I know some basic stuff but if your situation is complicated you will probably need to pay for the legal advice of a solicitor who specialises in tax.

If folk don't know what the questions then how can they answer. Is the property inherited.

I’m not an expert but do some capital gains in my work what’s the question

Use the HMRC a capital gains calculator

Sorry I wasn't sure if there would be anyone around.

As I write this I realise I am actually talking about stamp duty not capital gains.

I have a couple of properties other than my principal residence which I rent out.

I want to move in to one of those and sell my principal residence. No capital gains liability, obviously no stamp duty as the house is already bought.

If I subsequently want to buy another house and move into it and use it as my principal residence, keeping the other house - would I be liable for the higher rate stamp duty? It would be my next house and my principal residence.

Many thanks

Absolutely yes in Scotland. Elsewhere it depends on value of your other properties, so if over £40,000, then yes again.

This link may help.

www.protaxaccountant.co.uk/post/sdlt-on-main-residence-with-another-property

Thanks very much. Yes @Dearg that was very helpful. It's as I feared 😁
Thanks all.

Are you in Scotland because that sounds a little different from England? I can remember being advised that if you move into the “to be” main residence within three years of the purchase you could reclaim the extra stamp duty. Its a common situation where people retiring or downsizing buy their “to be” house shortly before retirement or selling their previous main residence.
The rules change over time but mainly check with someone qualified for your jurisdiction.

Op has a couple of other properties, so currently 3 in total. So unless she sells all three , this is not applicable .

you refer to stamp duty, therefore by implication your properties are in England (not Wales, Scotland or N Ireland). I will assume that if you are married then your spouse lives with you (if not the scenario is more complex)

you wish to sell your current PPR and occupy an ex-rental as your replacement main home
As you understand, that does not involve the purchase of an additional property so, as you acknowledge, there is no SDLT implication on that change of home.

you then wish to purchase a new ("replacement") main home whilst retaining the ex rental/ex main home after having sold the original main home

The key factor in your case is one of timing

In order to meet the criteria for replacing a main home, and thus avoid having tol pay higher rate SDLT, the new main home must be acquired within 3 (calendar) tears of the completion date of the sale of the old main home.

As your occupation of the "ex rental" is nothing more than a stepping stone between sale of old home and purchase of now home, that ex rental is completely ignored. So the fact your have gone from owning 3, to owning 2, to owning 3 is assessed against the acid test: have you replaced a main home: Yes or No?

Subject to the 3 year rule, your plan would meet the criteria for having replaced a main home and therefore you would NOT be subject to higher rate SDLT

Your scenario is covered by example 4 which affirms that the SDLT higher rate is NOT APPLICABLE
SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

sorry I'm not good at proof reading and you only get 1 go at editing, which I have used up before spotting the remaining typos
I trust it makes sense nonetheless.
The posts above mine are (dangerously) misleading

Wot23 is correct. Other posters are wrong.

Thanks so much much. I didn’t help by referring to the wrong tax in my title, I was awash with SDLT and CGT, sorry.

I know a poster has contacted me but I can’t find it, omg I am sounding so incompetent! When I work out how to find the message, I will answer - thanks again

To clarify - I am in England and not married. It’s hefty taxation for a single person, that’s why I’m trying to decide how to proceed.

I appreciate tax is complex, so I'll add this:
by moving into the rental property on an interim basis you will NOT attain main home status on that property and therefore your residence in that property will NOT change its liability to CGT when you sell it.

There is case law won by HMRC that establishes where residence lacks a "degree of permanence, continuity or expectation of continuity" then the property is NOT eligible for Private Residence Relief (ie offset against CGT) even though you physically occupy it for a period. In simple terms that fact you live there is ignored.

However, because it is an interim step, that is why the "carry over" for your SDLT entitlement from sold property to new purchase is permitted (subject to the 3 year limit). One can't have it both ways, avoid higher rate SDLT and lose CGT relief, or attain CGT relief but face higher rate SDLT on future purchase.

Has the rental property you intend to temporarily reside in been your main home in past as that will save you a bit of eventual CGT when selling it - assumes CGT rules are not changed!

how dependent on the rental income are you?

you would need to crunch the numbers to see if this saves money overall, but the obvious alternative scenario would be....

Move into one of your two rental properties and declare that is now your actual main home. Thus you start to build PRR entitlement on that, which will also enable you to claim the "final 9 months" of ownership as additional PRR even if you have moved out of it by then.
You would then need to sell that ex rental (pay CGT dues on that sale) and then purchase a new main home. As that is the simple replacement scenario then you would not pay higher rate SDLT on that new purchase even though you still own 1 rental
In simple terms your owned 3 properties (home + rentals x2), reduced that to 2 (rental + occupied ex rental) and then did not increase your property portfolio as you remain owned of 2 having sold ex rental and bought a new home as its replacement

obviously if you need to resume rental income from 2 properties the above won't work. However, as an investment strategy, being a small portfolio landlord does not have a bright future with the way legislation is likely to go. CGT rate almost certain to be harmonised with income tax rate and landlord regulations becoming increasingly onerous. When .if CGT rate changes from 24% to 40% it will take a lot of house price inflation to recover that extra cost when cashing in your investment.

Very much appreciate all of the advice, thank you so much.
i will sit down and get everything clear but I think I am going to have to change my plans and just get rid of everything. It’s a shame, because I have loved being a landlord but there you go.