CGT Question

[Mousem40]

Hi all just wondering if anyone had any info on the following.

I own and have been living in property 'A' for a year.
I've bought property 'B' which I'm looking to move into.

My question is if I rent out A while living in B but eventually sell A, do I pay CGT on it? Is there a timeframe for that?

My aim is to not pay CGT on either, which I will be looking to sell at somestage (tax dependant)

[andy400]

You'll get private residence relief and an annual tax-free growth amount. There may also be some other factors. I have recently sold a flat that had doubled in value, no CGT to pay due to the above.

directgov website is a good place to start, there are some other helpful websites. Google 'calculating CGT' or somesuch.

[amirzed]

if u sell in the next 3 years then there's no CGT, if you sell after then there is CGT for the period it wasn't your private residence less the last 3 years prior to sale.

All gains less the Annual CGT exemption obviously!

[Mousem40]

amirzed said:

if u sell in the next 3 years then there's no CGT, if you sell after then there is CGT for the period it wasn't your private residence less the last 3 years prior to sale.

All gains less the Annual CGT exemption obviously!

So if I live in Property 'B' for a tear then sell both I pay no CGT on either? If so what's the limit I can do in a 3 year period (ie if I only live in the properties for 6 months each can I do 7 tax free deals?

[Eric Mc]

andy400 said:

You'll get private residence relief and an annual tax-free growth amount. There may also be some other factors. I have recently sold a flat that had doubled in value, no CGT to pay due to the above.

directgov website is a good place to start, there are some other helpful websites. Google 'calculating CGT' or somesuch.

What do you mean "Annual Tax Free Frowth Amount"? Are you referring to the provisions that USED to exist that removed capital value growth due to inflation i.e. Indexation and Taper Relief?

Both Indexation and Taper Relief were abolished in Alistair Darling's massive revision of CGT in April 2008.

The only allowance you get today is the Annual Capital Gains Tax allowance, which curently stands at £10,100 per person.

As has already been mentioned, any property you live in or have lived in will qualify for CGT exemption as it was once your main residence. However, the relief is time apportioned.

If you owned a house for 10 years and lived in it for 3, for 3/10 of the period of ownership it was your main residence and therefore 3/10 of the value of the Gapital Gain is exempt from tax. In addition to this, you are given a "bonus" three years as well so in the computation 6/10 of gain is exempted.

You can also claim a further Commercial Lettings Allowance for the period it was rented out.

Edited by Eric Mc on Thursday 21st October 14:27

[andy400]

Eric Mc said:

andy400 said:

You'll get private residence relief and an annual tax-free growth amount. There may also be some other factors. I have recently sold a flat that had doubled in value, no CGT to pay due to the above.

directgov website is a good place to start, there are some other helpful websites. Google 'calculating CGT' or somesuch.

What do you mean "Annual Tax Free Frowth Amount"? Are you referring to the provisions that USED to exist that removed capital value growth due to inflation i.e. Indexation and Taper Relief?

Both Indexation and Taper Relief were abolished in Alistair Darling's massive revision of CGT in April 2008.

The only allowance you get today is the Annual Capital Gains Tax allowance, which curently stands at £10,100 per person.

As has already been mentioned, any property you live in or have lived in will qualify for CGT exemption as it was once your main residence. However, the relief is time apportioned.

If you owned a house for 10 years and lived in it for 3, for 3/10 of the period of ownership it was your main residence and therefore 3/10 of the value of the Gapital Gain is exempt from tax. In addition to this, you are given a "bonus" three years as well so in the computation 6/10 of gain is exempted.

You can also claim a further Commercial Lettings Allowance for the period it was rented out.

Edited by Eric Mc on Thursday 21st October 14:27

What's 'Frowth'?

Sorry for not using the right words, will have a stern word with myself. Annual allowance is what I was babbling about.

[Eric Mc]

I just wanted to clarify what you meant. The annual allowance of £10,100 is just that, an "Allowance" and is not there to elminate the effects of inflation or its effect on the "Growth" (see - I really can spell - when I try ) in value of the asset.

As I explained, their USED to be special reliefs available to elminate the inflationary effects on the growth in value of an asset but these are now gone.

[andy400]

Eric Mc said:

I just wanted to clarify what you meant. The annual allowance of £10,100 is just that, an "Allowance" and is not there to elminate the effects of inflation or its effect on the "Growth" (see - I really can spell - when I try ) in value of the asset.

As I explained, their USED to be special reliefs available to elminate the inflationary effects on the growth in value of an asset but these are now gone.

Fair enough. At least half of the time, even I don't know what I mean.

[Mousem40]

Thanks for the help!

Is there a limit to how many of these I can have? ie 7 concurent places I used to live in/am living in but are being rented out, then sell them all in one shot and pay no CGT?

[Eric Mc]

Mousem40 said:

Thanks for the help!

Is there a limit to how many of these I can have? ie 7 concurent places I used to live in/am living in but are being rented out, then sell them all in one shot and pay no CGT?

In absolute terms, no - but HMRC are unlikely to believe that a whole string of properties can have been your main residences - especially if the periods they were supposed to be your main residences were fairly short or in quick successions.

There is also the practical aspect of managing your life if youi keep changing addresses.

Having said all that, with careful timing and advance planning, it is, in theory, possible to own a succession of properties and get the Main Residence Capital Gains Tax relief.

Edited by Eric Mc on Thursday 21st October 15:49

[Mousem40]

Thank you Eric Mc, great info!

[Eric Mc]

andy400 said:

Eric Mc said:

I just wanted to clarify what you meant. The annual allowance of £10,100 is just that, an "Allowance" and is not there to elminate the effects of inflation or its effect on the "Growth" (see - I really can spell - when I try ) in value of the asset.

As I explained, their USED to be special reliefs available to elminate the inflationary effects on the growth in value of an asset but these are now gone.

Fair enough. At least half of the time, even I don't know what I mean.

I just noticed I used "their" instead of "there".

Forget what I said, I really CAN'T spell (or chose the right form of the word).