Capital Gains Tax
Discussion
I am selling two houses.
1. House in London inherited 4 years ago, likely to sell for something above what it was valued at for IHT when it came to me.
2. My residential house, owned for 7 years, likely to sell for less than I paid for it.
I know there is no CGT paid on one's residence, but in these circumstances can I combine the profit and loss to reduce any CGT payable?
1. House in London inherited 4 years ago, likely to sell for something above what it was valued at for IHT when it came to me.
2. My residential house, owned for 7 years, likely to sell for less than I paid for it.
I know there is no CGT paid on one's residence, but in these circumstances can I combine the profit and loss to reduce any CGT payable?
The claimant has to do as much as they can to prove that the house was their main residence or was intended to be their main residence.
There isn't an actual "period of residence" test but proof must be available to demonstrate that the individual actually lived there for some period or that they INTENDED to live there for some period.
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
There isn't an actual "period of residence" test but proof must be available to demonstrate that the individual actually lived there for some period or that they INTENDED to live there for some period.
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
Eric Mc said:
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
If I can ask a question further to this comment - I have a similar situation where I have disposed of 2 properties, both of which I lived in as my primary residence. Property 1 was my 'first' primary residence and I was then prevented from living in it due to my work, so I rented it out. I later bought property 2 as it was closer to my new work but subsequently moved due to work again and rented it out. Both have now been sold but can I claim I was always prevented from living in property 1 due to work even though I bought property 2? Both were sold in the same tax year as well. Property 1 made substantial cap gains but property 2 made very little, maybe 15-20k.He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
S6PNJ said:
Eric Mc said:
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
If I can ask a question further to this comment - I have a similar situation where I have disposed of 2 properties, both of which I lived in as my primary residence. Property 1 was my 'first' primary residence and I was then prevented from living in it due to my work, so I rented it out. I later bought property 2 as it was closer to my new work but subsequently moved due to work again and rented it out. Both have now been sold but can I claim I was always prevented from living in property 1 due to work even though I bought property 2? Both were sold in the same tax year as well. Property 1 made substantial cap gains but property 2 made very little, maybe 15-20k.He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
Eric Mc said:
The claimant has to do as much as they can to prove that the house was their main residence or was intended to be their main residence.
There isn't an actual "period of residence" test but proof must be available to demonstrate that the individual actually lived there for some period or that they INTENDED to live there for some period.
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
This is really interesting (I know I'm sad). I always thought there was a provisional six month rule. It's amazing the things you learn on Pistonheads.There isn't an actual "period of residence" test but proof must be available to demonstrate that the individual actually lived there for some period or that they INTENDED to live there for some period.
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
leef44 said:
S6PNJ said:
Eric Mc said:
I had a case once where we were able to prove that a property was a main residence for CGT purposes even though the owner hardly ever lived there. The reason why HMRC agreed was because the chap bought the house intending to live there and was almost immediately sent abroad by his employer.
He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
If I can ask a question further to this comment - I have a similar situation where I have disposed of 2 properties, both of which I lived in as my primary residence. Property 1 was my 'first' primary residence and I was then prevented from living in it due to my work, so I rented it out. I later bought property 2 as it was closer to my new work but subsequently moved due to work again and rented it out. Both have now been sold but can I claim I was always prevented from living in property 1 due to work even though I bought property 2? Both were sold in the same tax year as well. Property 1 made substantial cap gains but property 2 made very little, maybe 15-20k.He then bought a bigger "main residence" when he came back to the UK after a few years. He had a bigger family by then and the original house was too small.
I think you could quite easily claim that you were following the example of 90% of MPs by deciding whichever house you choose as long as it is financially beneficial to you.
On the same note but perhaps more seriously the MPs behaviour and the CPSs general lack of willingness to prosecute may have set some valuable precedents.
On the same note but perhaps more seriously the MPs behaviour and the CPSs general lack of willingness to prosecute may have set some valuable precedents.
bobt said:
I think you could quite easily claim that you were following the example of 90% of MPs by deciding whichever house you choose as long as it is financially beneficial to you.
On the same note but perhaps more seriously the MPs behaviour and the CPSs general lack of willingness to prosecute may have set some valuable precedents.
I also frequently condemn the appalling behaviour both fiscally and otherwise of modern politicians.On the same note but perhaps more seriously the MPs behaviour and the CPSs general lack of willingness to prosecute may have set some valuable precedents.
However I would strongly advise against seeking to use their misdeeds as a precedent in a defence. Whether we like it or not some people in the UK are more equal than others. Relying upon not being prosecuted is a VERY high risk strategy. Being less than honest with the Revenue is a bad idea.
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