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Hi Sam. Completion certificate was issued in February 2011 and due to a job relocation, I had to let out my property but wish to sell it next year. Do I have to pay 40% capital gains tax or is there any way of avoiding this if I move back to the property and use it as my main residence? Thanks. Alison
In response to your questions:
1. Moved into the house in April 2011. This was date of ownership.
2. Property let from October 2012 to present date.
3. Yes still let. About to extend the lease for 6 months to a year.
4. Yes lived in the property from April 2011 to October 2012.
5. Not sure of likely gain because it cost approx £225,000 to build plus a lot of extras to furnish etc. I imagine it would sell for around £300,000 in current climate.
Main residence (Apr 2011 to Sep 2012) = 18 months
Rented period (Oct 2012 to say Sep 2013) = 12 months
Total period of ownership (18+12) = 30 months
Capital gain say (300,000-240,000) = £60,000
Private residence relief = 18 months
The final three years (36 months) always qualify for relief, even if you weren't living there, as long as it's been your only or main home at some point during the time that you've owned it.
I hope this is helpful and answers your question.
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That is very good news. Sorry for my ignorance but does that mean that I have got to sell within the 36 month period since taking up ownership which was April 2011? Will I be penalised if I don't sell until October 2014 which is the date that I am tied into a mortgage?