UK Tax Questions? Ask a UK Tax Advisor for answers ASAP
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No there is no limit on long you can let the property before selling. However as you may be aware that when you sell your property which was once your main home and later let you have the following reliefs:
1. Principal private residence relief is given for all the proportion of the gain during the period the property was your main residence. If say the total gain is £100k and this gain is split proportionally between the time you lived in the property as main residence to the time you were letting this. You also get an extra 3 years towards main residence by the taxman.
2. You aso get letting relief where a house that has been your main private residence is let as residential accommodation. The remaining portion of the gain apportioned to the time you were letting the property is netted off by this letting relief which is up to £40,000 per owner. Therefore if you are jointly owning the property you will get up to £80,000 letting relief. The actual calculation is complicated and you should take advice when you eventually sell the property or before you sell the property.
Hope this helps.
So if I understand you correctly, if, for example, it cost us £100k to build the bungalow and it is now worth £200k, if we sold it now we would not have to pay capital gains tax on the £100k gain? Also, if we were to let it for 2 years, for example, the gain would be how much the value of the property increases by the time we sell it? So if, for example we let it for 2 years then sell it and is it worth £220k at that time, again, we don't pay any capital gains tax.
If you lived in the property as your main home - no cgt
Ok, that's great. Thank you.
if you lived in the property and then let it - the gain is spread over the years of ownership, and the portion of the gain relating the period it was main residence is cgt free; and IF you have any remaining gain this is netted off against letting relief upto £40k.
See this LINK for an example of this case.