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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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how long do i have to live in a house before selling it and

Resolved Question:

how long do i have to live in a house before selling it and not subject to capital gain tax in the uk?
Submitted: 2 years ago.
Category: UK Tax
Expert:  Tony Tax replied 2 years ago.
Hi.

So long as you live in the property for the entire period of ownership, you have three years to sell it after you move out before you need to consider capital gains tax.

Take a look at HS283 for more information.

Let me know if you have any further queries.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14294
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and 4 other UK Tax Specialists are ready to help you
Customer: replied 2 years ago.
I moved out of my house in october 2009 into a flat I own. I live in this flat for 10 months than I decided to sell it and move back to my previous house because the flat was too noisy also I was not able to let my previous house Do I have to pay any capital gains tax when I sell decided to sell the flat ?
Expert:  Tony Tax replied 2 years ago.
Can you give me some history of your ownership of the flat please? When did you buy it (month and year)? How much did it cost to buy? What is the history of its occupation? How much is it worth now?
Customer: replied 2 years ago.
The flat was let before I took it back for my own use. The flat is part of a house consisting of 4 flats The house was bough 33 years ago for £18,500. I spent around £40,000 to renovate it when I moved in and 10 months later I sold it for £197,000. The agent & solicitor fees came to around £4,000. I have all doucmentation to show I live in the flat, utility bills, council tax bill, bank statement & electoral registation.
Expert:  Tony Tax replied 2 years ago.
Was the flat let from when you bought it until you moved into it in October 2009? Which month in 2010 was it sold (date of exchange of contracts)?
Customer: replied 2 years ago.
yes it was let from the time we bought it. It was with sitting tentants. The sale was completed on 30/06/2010. I assume the exchange contract must be sometime in June.
Expert:  Tony Tax replied 2 years ago.
The date you exchanged contracts is critical as the CGT rates changed on 23 June 2010. Can you find out what it was please.
Customer: replied 2 years ago.
I was told exchange & completion was on the same date, 30.06.2010
Expert:  Tony Tax replied 2 years ago.
Thanks. I'm doing some calculations and will post my answer in a few minutes.
Expert:  Tony Tax replied 2 years ago.
Hi again.

CGT runs from 31 March 1982 so you will need to find the value of the property at that date as it will be your cost for CGT purposes and it will probably be more than £18,500. However, for my calculations, I have used £18,500 as the cost.

You made a gain of £134,500 when you sold the property (£197,500 - £18,500 - £40,000 - £4,000). By the time you sold it, you had owned it for 339 months from March 1982, it had been let for 330 months and you had lived in it for 9 months.

The gain for the period the property was your main home is exempt from CGT as is the gain for the last 36 months of ownership, excluding any overlaps. That accounts for £14,283 (£134,500 / 339 x 36). The remaining gain of £120,217 is that part of the letting period gain which is not covered by the last 36 months of ownership (£134,500 / 339 x 303).

As the property was both your main home and it was let you are entitled to letting relief which is the lesser of:

1 £40,000,

2 the sum of the main residence gain and the gain for the last 36 months of ownership of the property which is £14,283 and

3 the letting period gain of £120,217.

So, letting relief of £14,283 will reduce the taxable gain from £120,217 to £105,934 and the £10,600 CGT exemption will reduce it further to £95,334. You will have to pay CGT on that at 18%, 28% or a combination of the two rates depending on the level of your income in 2010/11. The most that can be charged at 18% is £35,000 and that will be reduced by £1 for every £1 of income you had in 2010/11 over £6,475.

Let me know if you have any queries.

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Tony Tax
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Inc Tax, CGT, Corp Tax, IHT, VAT.